October 19 (SeeNews) - The World Bank said it has reduced its projection for Serbia's economic growth in 2017 to 2.3% from 3.0% forecast in its June 2017 Global Economic Prospects Report.
Serbia's GDP is expected to grow by 3.0% in 2018 and 3.5% in 2019, the World Bank said in its October 2017 Europe and Central Asia Economic Update Report.
"Growth is slowing down in 2017, mainly due to unfavourable weather conditions (severe winter and a long drought) and a slowdown in investment," the lender said. "Thanks to the continued fiscal adjustment, Serbia is now running a significant fiscal surplus. Poverty (living on income under $5.5/day, PPP) is estimated to have declined from 24.1% in 2014 to 23.4% in 2016. Going forward, growth is expected to reach 3-4 percent, although risks remain, especially from policy reversals related to previous fiscal stability programme."
As part of the government’s fiscal consolidation programme, another nominal electricity tariff increase in 2017 is expected in the autumn, though smaller than previous increases, the World Bank said.
While recognising the positive fiscal consolidation progress since 2015, sustainability of public finances over the medium term and faster growth require further efforts toward implementation of structural reforms - in secondary and tertiary education, health financing, privatisation of remaining state stakes in SOEs and financial institutions, the bank noted.
"Also, special attention needs to be paid to expanding external imbalances. The potential distributional impacts of these important structural reforms may present continued challenges to faster poverty reduction in the short run. Despite recent improvements, labour force participation and employment ratios are still low while unemployment is high, especially for the young. Therefore, policy design needs to consider appropriate social assistance and facilitate access to employment," the World Bank said.
Serbia's economy expanded by 2.8% in 2016.