November 1 (SeeNews) - Erste Group is considering a downward revision of its forecast for Serbia's gross domestic product (GDP) growth in 2022 by about 1 percentage point (pp), as poor performance in the third quarter indicates a slowdown has begun, it said.
"We will revise our forecast in the upcoming week(s) in detail, but early estimates suggest a downward revision by around 1 pp for 2022 and around 1.5 pps for 2023 from our current calls of 3.5% and 3%, respectively," Erste Group said in a research report on Monday.
In a flash estimate issued on Monday, Serbia’s statistical office said the economic output increased by a real 1.1% year-on-year in the third quarter of 2022, significantly lower than the consensus estimate of 2.6% growth.
"Growth forecasts will need additional cutting as we expect a stagnation quarter-on-quarter in the fourth quarter of 2022 and a mild contraction in the first three months of 2023 driven by a projected recession in the euro area, the impact of high and prolonged inflation and a deterioration in consumer and business confidence," Erste noted.
Global outlook is becoming less and less supportive, due to the generalised tightening of monetary policy, driven by the greater-than-expected overshoot of inflation targets, making a further slowdown in Serbia's economic growth inevitable, the bank added.
In August, Erste upgraded its 2022 forecast for Serbia's GDP by 1 pp to 3.5%, while downgrading its forecast for next year by 0.7 pp to 3%, reflecting expected weak carry-over and slowing external demand.
Serbia's GDP grew 7.4% in 2021, the country's statistical office said in February, citing preliminary data. In the fourth quarter alone, GDP grew by a real 7.0% year-on-year, after rising by 7.6% in the previous quarter.
Last month, the International Monetary Fund (IMF) said it expects Serbia's economy to grow by 3.5% this year, affirming its April projection. Serbia's gross domestic product (GDP) is expected to grow by 2.7% next year, IMF said.