June 2 (SeeNews) - Erste Group is keeping its forecast for a 2.3% decline of Serbia's gross domestic product (GDP) in 2020 despite the robust 5.0% economic growth reported for the first quarter of the year, it said.
"Despite the strong entry into 2020, it will be difficult for Serbia to avoid a contraction this year. April’s double-digit decline in both industrial production and retail activity suggests that strong(est) negative blow will be recorded in 2Q20," Erste Group said in an instant comment on Monday after Serbia's statistical office published GDP data earlier in the day.
The first quarter of 2020 saw a significant real growth of gross value added in the construction sector, of 19.6% year-on-year, while the sectors of public administration and defence, compulsory social security, education, human health and social work activities added 11.8% each, the country's statistical office said on Monday. On a quarterly comparison basis, Serbia's economy declined by 0.6% in the January-March period.
"It is highly uncertain what will happen once government payroll support measures end in June. Consumer confidence indices suggest it will take a lot more time before confidence is back on pre-virus levels. Hence, labour market developments could take a turn for worst from mid-year, thus weighing on overall consumption activity," Erste Group said.
On the other hand, net exports contribution are expected to be slightly positive in 2020, while public investments will cushion the adverse effects of the coronavirus crisis to some extent, it noted.