August 16 (SeeNews) - Serbia's central bank, NBS, affirmed on Wednesday its projection for the country's economic growth at 3% in 2017 and 3.5% in 2018.
Stepped-up implementation of infrastructure projects and continued improvement of the business environment will support the expected growth acceleration in the coming period, NBS said in its Inflation Report for August 2017.
The favourable financing conditions, higher profitability of the economy and a continued foreign direct investment (FDI) inflow contribute to investment growth, the NBS said.
"Still, the contribution of net exports will be lower than last year due to the increased imports of equipment and intermediate goods for corporate needs, and to some extent higher imports of consumer goods on account of the recovery of final consumption," the central bank noted.
The expected rise in household consumption should reflect also on higher activity in most service sectors which will give a positive contribution to GDP growth in 2017, on the production side. "In addition to services, a positive contribution should come from manufacturing, as indicated by movements recorded since the start of the year, as well as the expected continuation of growth in the euro area and our other important foreign trade partners," the NBS said.
GDP growth is expected to quicken to around 3.5% in 2018, supported by the sustained recovery of household consumption and a continued rise in investment and exports, which should reflect on faster growth in the industry and service sectors.
"Further improvement of the business environment and sustained growth in the euro area and our other important foreign trade partners ought to contribute to the acceleration of GDP growth," the central bank said.
In June, the World Bank increased its projection for Serbia's economic growth in 2017 to 3.0%, 0.2 percentage points higher than the forecast made in January. Serbia's GDP is expected to grow by 3.5% in 2018 and 2019 each, the World Bank said.
The Serbian statistical office said in a flash estimate earlier this month that the country's economy expanded by a real 1.3% year-on-year in the second quarter of 2017. Serbia’s real GDP growth slowed to 1.2% year-on-year in the first quarter of 2017, from 2.5% in the previous quarter.