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Nov 15, 2017 16:25 EEST
November 15 (SeeNews) - Serbia's central bank, NBS, lowered on Wednesday its projection for the country's economic growth in 2017 to 2% from 3% estimated in August, due to the negative effects of supply-side factors in the first half of the year.
The negative effect of supply-side factors largely reflected in the contraction in the agriculture and energy sectors is the key reason for the downward revision of the GDP growth forecast for the year, the NBS said in its Inflation Report November 2017.
"The contribution of net exports this year will probably be negative due to higher energy imports from early 2017 caused by cold weather and the expectedly lower exports of agricultural commodities due to a poor agricultural season," the NBS said.
However, GDP growth will be propped up by rising exports of goods and services, owing to elevated external demand and the expansion of production capacities on the back of investment from prior years, the NBS said.
"Important contributors include further improvement of the business environment, a high and project-diversified FDI inflow, implementation of infrastructure projects and past monetary policy easing, which positively reflects on investment. In addition, the continuation of favourable labour market trends has a positive impact on growth in household consumption."
The GDP growth is expected to accelerate to around 3.5% in 2018 and 2019 chiefly due to the faster expansion of household consumption on the back of an expected further rise in real disposable income. In addition to a continued rise in employment, a contribution is also likely to come from the growth in the minimum wage and public sector wages and pensions, and the expected preservation of price stability, the central bank said.
Last month, the International Monetary Fund (IMF) affirmed its forecast for Serbia's economic growth in 2017 at 3.0%. In 2018, Serbia's GDP is expected to grow by 3.5%, the same rate as in the April estimate, the IMF said in the October edition of its World Economic Outlook report.
The Serbian statistical office said in a flash estimate earlier this month that the country's economy expanded by a real 2.1% year-on-year in the third quarter of 2017. Serbia’s real GDP growth accelerated to 1.3% year-on-year in the second quarter of 2017, from 1.2% in the previous quarter.
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