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The Government of the Republic of Serbia

In the service of citizens

First signs of economic recovery soon to be visible

Belgrade, 12 July 2010

Prime Minister Mirko Cvetkovic stated that the Serbian public will be able to see the first signs of economic recovery in the second half of this year, when GDP growth and an increase in employment are expected.

In an interview with Tanjug news agency yesterday, Cvetkovic emphasised that a full economic recovery is expected to take place in 2011, adding that people will be able to see an improvement when the economic growth rate rises above 2% and reaches nearly 3% of GDP, which is predicted to happen next year.

At the micro level this will happen when employment increases as a result of GDP growth and vice versa, he observed.

Official statistics show that Serbia exited recession in the first quarter of 2010, as GDP growth of 0.6% to 0.7% was seen then when compared to the same period last year, Cvetkovic highlighted.

The Prime Minister said that although no official statistics are available for the second quarter he is convinced that GDP growth rate will be over 1%, adding that certain indicators give reason to believe that it could be nearly 2%, which will bring the economy closer to growth rates seen prior to the crisis.

There could be surprises in store for us regarding expected growth rates but positive rather than negative ones, because now the growth of the Serbian economy has a far better basis than it did prior to the global economic crisis, he explained.

These estimates are based on statistical data on industrial growth and exports during the first six months of this year, taking into consideration the obvious fact that the national economy is now entering new markets outside the country, he underlined.

The Serbian government’s long term strategy will mostly focus on creating an export oriented economy. This will make the economy sustainable in the long term and it will not be vulnerable to temporary disturbances if they occur, outlined Cvetkovic.

Looking at official statistics, it is surprising to see that some countries in the region, as well as Europe, have still not exited recession. This presents a cause for concern because these countries are a market for the Serbian economy, the Prime Minister asserted.

Serbia’s high double digit figure of exports growth rate is a success which is even more significant bearing in mind that countries still in recession are importing Serbian goods, stressed Cvetkovic.

Anti-crisis measures implemented by the Serbian government played a big role in Serbia’s exit from the recession, he pointed out, adding that the partial recovery of the global economy also helped.

Growing exports and industrial production in the food sector, which was least hit by the crisis, contributed to the climb out of recession. The worst hit was the durable consumer goods sector, he elaborated.

At the moment Serbia does not require the entire sum of €2.9 billion provided under an arrangement with the IMF for strengthening foreign currency reserves, however the possibility of using part of the funds for covering the budget deficit should be discussed with the IMF, affirmed the Prime Minister.

Talking about extending the arrangement with the IMF which expires in April 2011, Cvetkovic stressed that a decision regarding the matter will be made next year, after an analysis of the results of cooperation to date.

The arrangement with the IMF was useful for Serbia amidst the crisis, particularly concerning the Vienna Agreement, as Serbia’s economic policy was backed by the IMF, he remarked.

The government’s policy in the period just after exiting the crisis will contain many elements of its policy during the crisis, he illustrated.

Work on the construction of infrastructure will be intensified, as this will increase competition and attract investment. This will also help with GDP growth as new jobs will be created, he added.

In September, a set of anti-crisis laws and the law on fiscal responsibility will be finalised, announced Cvetkovic, adding that since all these documents have already been drafted no delays are expected in this regard.