September 20 (SeeNews) - The International Monetary Fund (IMF) said it expects the economic growth of Serbia to slow to 2.3% in 2017 from 2.6% last year, before accelerating to 3.5% in 2018.
Economic activity continues to expand, notwithstanding a temporary slowdown in the first half of the year, largely reflecting disruptions in electricity production and the negative impact of the drought on agricultural output, an IMF staff mission said in the concluding statement of its visit to Belgrade on Tuesday.
The mission led by James Roaf visited Belgrade during September 13-19, 2017 to initiate discussions on the 2018 budget and discuss progress in the implementation of structural reforms.
Domestic demand growth is robust, with continued recovery of private consumption and strong foreign direct investment. Importantly, labour market conditions have continued to strengthen, with about 120,000 new jobs created in the 12 months through June, the IMF said.
"Economic policies should remain focused on improving the supply response of the economy, through the implementation of reforms aimed at fostering private sector activity. These include an improved business and investment environment; more efficient public administration and state-owned enterprises; and higher quantity and quality of public infrastructure," the IMF noted.
The mission started discussions with the authorities on fiscal policy for the remainder of 2017 and the key parameters of the 2018 budget, to be concluded in the October review mission.
Against continued strong fiscal over-performance in the first seven months of 2017, discussions also covered potential uses of the additional fiscal space, including additional investment in priority areas, prudent increases in public wages and pensions, a reduction of labour taxes, and faster debt reduction. These discussions will continue in the coming weeks, the IMF added.
A full mission for the eighth and final review under Serbia’s precautionary stand-by arrangement (SBA) with the IMF is planned for late October and early November.