May 6 (SeeNews) - The European Commission (EC) expects Serbia’s economy to shrink by 4.1% in 2020 due to the impact of the coronavirus crisis, before expanding 6.1% next year, it said on Wednesday.
"Both the contraction and recovery are forecast to be mainly driven by private consumption and investment. The overall short duration of lockdown measures is not expected to durably affect production capacity and the longterm growth trajectory, allowing for a strong recovery, also in line with the forecast recovery of external demand," the Commission said in its Spring 2020 Economic Forecast.
Although a potential faster lifting of the main restrictions might allow for an earlier and stronger rebound, a potentially more protracted duration of restrictions on some sectors may more persistently affect consumer confidence and consumption patterns, thereby dampening the economic recovery, the EC said.
"The debt-to-GDP ratio is projected to rise above 60% in 2020 reflecting both the high deficit and low GDP developments, before resuming its gradual decline in line with the economic rebound and lower deficit developments in 2021," the EU Commission noted.
While government measures are expected to mitigate lockdown-induced job losses, the economic contraction is nonetheless seen to temporarily interrupt the continuous decline of unemployment over the last five years and Serbia's jobless rate is forecast to rise to 12.7% in 2020 from 10.3% last year, the EC added.
European Commission's outlook on the main economic indicators of Serbia (pct change), as per Spring 2020 Economic Forecast:
|
2019 |
2020 |
2021 |
GDP growth |
4.2 |
-4.1 |
6.1 |
Debt-to-GDP ratio (in pct) |
52.8 |
62.2 |
59.5 |
Unemployment rate |
10.3 |
12.7 |
10.0 |