Serbia Sees GDP Growth Slowing to 4.0%, Budget Deficit Not Exceeding 2.0% in 2009 - PM

“The effects of the global financial crisis will be felt through a form of recession that will hit Serbia in 2009 as a result of fewer foreign direct investments expected to enter the country,” Cvetkovic told the Second Business Round Table with the Serbian government.

“We consider this slowdown of the economy a type of recession,” Cvetkovic said. 

Serbia's economy grew by a real 7.1% last year, faster than the 5.6% rise recorded in 2006, according to revised data. The country’s gross domestic product (GDP) grew by an annual 7.3% in the first half of 2008, after rising by 8.4% on the year in the first quarter.

Cvetkovic also said that Serbia’s budget deficit in 2009 will not exceed 2.0% of the projected GDP. The government raised its 2008 budget deficit forecast to 2.0% from 0.5% last month to back a pension hike and to allot more incentives to Italy’s Fiat as the deal with Serbian car manufacturer Zastava moves forward. Serbia’s consolidated budget deficit totalled 297 million euro in the first eight months of the year.

In a bid to minimise the impact of the global financial crisis, Serbia plans to raise the guarantee for depositors in local banks to 50,000 ($68,600) from the current current 3,000 euro and to scrap the capital gains tax. The government will also incorporate a special fund for emergency interventions in the country's banking sector within its 2009 budget, Cvetkovic said last week.

($ = 0.805 euro)