March 2 (SeeNews) - Erste Group has said it expects Serbia's gross domestic product (GDP) to grow by 2.9% in 2018, on the back of stronger domestic demand, but also stronger imports.
Domestic demand should have a positive and stronger contribution this year, supported by the continuation of the stable private consumption profile, more expansionary fiscal stance and accelerating investments, driven by the public investment cycle, more favourable demand factors, accelerating lending activity and somewhat better business climate, Erste Group said in a flash forecast earlier this week.
On the other hand, net exports will have a negative contribution, due to stronger pressures on imports coming from the stronger performance in all sectors, Erste Group said. "However, we expect that exports will keep their solid pace, moving around the 10% y/y mark."
Serbia's GDP grew by a real 2.5% year-on-year in the fourth quarter of 2017, the country's statistical office said earlier this week, confirming its flash estimate issued last month.
Detailed data on GDP components brought no major surprises, as private consumption and investments played a key supportive role for the headline figure, while the contribution of net exports was negative, due to stronger pressures on import side and somewhat weaker export performance, Erste Group said.
Private consumption and government consumption kept their stable performance and expanded by 1.9% and 1.1% on the year, respectively. Investments recorded notable acceleration in the fourth quarter, with the growth rate standing at 12.4% versus the average 6.2% in the previous quarter, probably supported by both private and public investments, Erste Group added.
On the other hand, exports lost some momentum, as the growth figure landed at 7.5% on the year versus 11.6% in the fourth quarter, while imports accelerated from 10.8% to 12% in the same period, driven by consumption and stronger investments.
Erste Group said on Monday it expects Serbia's public finances to remain sustainable in the mid-run despite the upcoming introduction of various tax-related subsidies for companies and increase in wages and pensions.