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BELGRADE (Serbia), June 12 (SeeNews) – Erste Group expects Serbia’s economic growth to accelerate to 3.5% in 2020, from 3.3% forecast for this year, on the back of private consumption, it said.
"External headwind expectations seem a tad overdone and announced labour tax incentives imply further private consumption acceleration," Erste Group said in a macro outlook report on Tuesday.
The unresolved Kosovo issue, the expected decline in production of the factory of FCA, the EU-imposed steel quotas and expected weaker agricultural output amid heavy rain and floods are the key risks factors for Serbia's economic growth, Erste Group said.
The monetary policy stance is expected to remain accommodative and growth-supportive, Erste Group said.
"Should recent dinar appreciation pressures span over a longer period, we would not be surprised to see a cut in the key rate thus also syncing with recent ECB's statements that additional easing measures are on the horizon."
In March, Erste said it expects Serbia's gross domestic product (GDP) growth will slow to 3.3% in 2019 from an estimated 4.3% last year, due to the weakening of external demand, double-digit import growth and slowing exports.
Serbia's central bank said in February it expects the country's economy will grow by 3.5% in 2019, driven by domestic demand.