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Erste revises down Serbia's 2020 GDP growth forecast to 1.5%

Author Radomir Ralev
Erste revises down Serbia's 2020 GDP growth forecast to 1.5% Author: Georgi Georgiev. License: All rights reserved.

BELGRADE (Serbia), March 19 (SeeNews) - Erste Group has revised down its forecast for Serbia's gross domestic product (GDP) growth in 2020 to 1.5% from 4.0% due to the adverse effects of the coronavirus crisis in Europe, it said.

"Although in our baseline scenario the virus impact is seen as transitory, its effects on this year’s growth are substantial," Erste Group said in a research report earlier this week.

Weaker consumer confidence and quarantine measures will weigh on consumption, but the biggest risk entails a possible halt of investments, Erste Group said. The strong Chinese presence in Serbia suggests the country is relatively more exposed to the supply shock.

Erste Group has also lowered its inflation forecast for Serbia by one percentage point in 2020 to 1%, due to the impact of the coronavirus disease on domestic demand and global commodity prices, it said.

The dinar is expected to slightly appreciate throughout the year due to the higher economic growth of Serbia compared to other countries in the region, Erste Group noted.

The general elections in Serbia, which were initially set for April 26, are expected to be held in late 2020, while campaigning will likely be characterised by two main themes: opposition calls for a boycott and strong international pressure on both Serbian and Kosovo authorities to restart negotiations for the normalisation of relations, the bank added.

On March 17, Erste Group said it decided to further lower its economic growth forecast for Central and Eastern Europe (CEE) in 2020 to 2.4%, from 2.6% predicted a few days ago, as the rapid spread of the coronavirus disease could bring the Eurozone to the brink of recession.