January 24 (SeeNews) - French credit insurance agency Coface said it expects Serbia's economic growth to accelerate to 3.3% in 2018 from 2.0% last year, backed by public and household consumption.
Households will benefit from rising wages, both in the private and public sectors, a 5% increase in pensions from January 1, more jobs and growth in credit, which is expected to get cheaper with key rates cut by 3.5% in October 2017, Coface said in its Country and Sector Risks 2018 report.
Serbia's administrations are expected to increase their purchases of goods and services, as a result of budgetary margins, while public investment in the road, rail and irrigation networks will also benefit, Coface said.
"While foreign investment in industry, construction and trade will continue, private domestic investment should finally benefit from the resumption of lending to businesses, even if credit will remain limited by the still high non-performing loan ratios, especially at the publicly-owned banks."
The country is expected to turn to budget deficit of 0.3% of GDP in 2018 from a surplus of 0.5% of GDP last year, while average annual inflation is expected to remain stable at 3.3%, the same as in 2017, Coface said.
Serbia's public debt-to-GDP ratio is projected to fall from 65% last year to 64% in 2018.
Serbia will continue negotiations to join the EU, even if the normalisation of relations with Kosovo is delayed and those with Bosnia Herzegovina are complicated by the attitudes of the Bosnian Serbs, Coface said.