November 2 (SeeNews) - Greece's Eurobank Ergasias said it expects Serbia's economic growth to slow to 2.0% in 2017 from 2.8% last year, as investments, net exports and government spending have proven weaker than earlier anticipated.
Serbia’s economic growth in 2018 is forecast at 3.0%, to be fueled by private spending, Eurobank analysts said in their latest macroeconomic outlook report on the countries in Central and Southeastern Europe (CESEE) posted on the lender's website on Wednesday.
A strong rise in foreign direct investments (FDIs) does not appear capable of outweighing the aforementioned headwinds. The low overall investment-to-gross domestic product (GDP) ratio, estimated to be at around 17.5%, is lagging significantly behind the regional average of 23.5% and remains a key issue for the Serbian economy, Eurobank said.
"Solid budget execution has been the highlight of Serbia’s macroeconomic picture so far in 2017. The surplus totalled 90 billion dinars in the first three quarters, with the 2017 surplus anticipated at around 0.5%-0.7% of GDP, the first surplus to be recorded since 2005."
However, some cautious fiscal expansion may emerge next year amid planned increases in public sector wages and pensions, according to Eurobank's analysts.
The baseline scenario currently is for stable interest rates for the remainder of the year as private consumption is on a recovery path and external risks linger, Eurobank said. However, the bank's analysts warn against possible delays in the implementation of reforms, lack of a new International Monetary Fund (IMF) policy anchor as current deal expires in 2018, and domestic political jitters amid speculation of another snap election.
The Serbian economy expanded by a real 2.1% year-on-year in the third quarter of 2017, the country's statistical office said in a flash estimate earlier this week. Serbia’s real GDP growth quickened to 1.3% year-on-year in the second quarter of 2017 from 1.2% in the previous quarter.