Serb Economy to Contract 2.5% in 2012, Economics Institute Says

Serbian economy will contract 2.5 percent this year, before a rebound in 2013, as industrial output faltered and the Balkan country suffered a poor harvest.

The forecast is more than double the government’s official prognosis for a 1 percent contraction in gross domestic product, Stojan Stamenkovic, the chief economist at the privately run Economics Institute, said in Belgrade today.

“We maintain our forecast for at least a 2.5 percent decline this year and at least 2 percent growth next year,” Stamenkovic said.

Serbia’s economic activity probably dropped 2.2 percent in the third quarter, according to a Statistics Office preliminary report, extending declines for the third consecutive quarter and following a 0.8 percent contraction in the second quarter and a 2.5 percent decline in the first quarter.

The growth forecast for 2013 matches official expectations, with growth next year led by Fiat SpA (F) car exports from Serbia and some new investments.

The institute also forecast this year’s inflation of at least 13 percent as last summer’s drought, high public spending and monopolies keep pressure on prices.

“We believe inflation will be at least 13 percent at the end of December while statistical models indicate inflation of as much as 14 percent,” said Vladimir Vuckovic, member of the Fiscal Council.

To contact the reporter on this story: Gordana Filipovic in Belgrade at gfilipovic@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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