April 5 (SeeNews) - The World Bank expects Serbia's economic growth to slow to 3.5% in 2019 from 4.2% in 2018 as effects from the increase in consumption and investment were to a
large extent exhausted last year, the bank said on Friday.
The medium-term growth projections crucially depend on the pace of structural reforms and progress with EU accession as Serbia needs to deal with its large and unsustainable state-owned enterprises (SOEs) sector, the World Bank said in an Economic Update for Europe and Central Asia.
Acceleration of the EU accession process is important not only from the point of view of strengthening of institutions but also as a signaling device to attract investment, the World Bank said.
"In addition, the work on regional projects (mainly on investment in infrastructure which connects – roads, railways etc.), would help Serbian exporters and growth of the economy overall."
Risks are mainly associated with internal political developments. Regional disputes, slow progress with the EU accession process and constant threat of early elections cause a caution among both local and foreign investors, the World Bank said.
"This in turn delays realization of some of important projects both related to infrastructure and to the real sector. Despite recent labor market improvements, employment rates remain low and limit the scope for robust welfare improvements."
Serbia's exports are projected to grow by around 9.5% annually in real terms, while investment are projected to increase by about 6.5% in real terms annually, over the next three years.