BELGRADE (Serbia), March 31 (SeeNews) – The World Bank expects Serbia's economy to grow by 5.0% this year before expanding by 3.7% in 2022, it said on Wednesday.
"Growth will be driven by consumption and investment will recover only slowly, which may slow down the impact of growth on labor markets (both employment and wages). This medium-term outlook crucially depends on international developments (including the control of COVID-19), the pace of structural reforms and political developments," the World Bank said in its Europe and Central Asia Economic Update Spring 2021.
In October, the World Bank projected that Serbia's economy will grow by 2.9% in 2021.
"Immediate focus is needed on measures to improve the business environment and governance in order to lower the cost of doing business and ensure security and safety, as well as efforts to improve the quality of infrastructure. Regarding the medium- to long-term challenges the focus should be on demography and climate change," the World Bank said.
The pace of labour market recovery will be critical for resumed poverty reduction and the new package of measures is expected to support citizens and economic recovery, though poor and vulnerable households, who tend to depend more on self-employment and less secure jobs, may take longer to regain their income level. Poverty is projected to slowly decline to 16.8% in 2021, the World Bank noted.
"In the medium term, regional disputes and slow progress with the EU accession process could affect investment sentiment and therefore delay investment projects in infrastructure and other sectors. Labour market challenges limit the scope for robust welfare improvements and could be exacerbated by a significant brain-drain," the bank added.
The Western Balkans region comprising Albania, Bosnia and Herzegovina, Kosovo, North Macedonia, Montenegro, and Serbia, will record economic growth of 4.4% in 2021, the World Bank said. Growth in the region is projected at 3.7% in 2022.