Serb Economic Growth Speeds Up in 1st Quarter, Beating Forecasts

  • Economic activity beats analysts forecast of 1.4% growth
  • Robust growth comes from rising investments and exports

The Serbian economy expanded an estimated 3.5 percent in the first three months of the year, beating analysts’ forecasts, as the biggest former Yugoslav republic benefits from an increase in diversified investments and widening exports.

The figure, published by the Statistics Office in Belgrade on Wednesday, compares with a 1.8 percent contraction in the same three-month period of 2015. It also shows the fastest quarterly expansion since the last quarter of 2013. Analysts surveyed by Bloomberg predicted the economy growing 1.4 percent.

“The release of the GDP number suggests that snap elections did not weigh on the growth momentum in the first quarter of the year,” Deanie Jensen, an emerging-market economist at ING Groep NV in London, said in a note after the release. “Looking ahead, we expect investment activity to pick up further, while government spending should remain fairly subdued in line with fiscal consolidation plans.”

Premier Aleksandar Vucic, whose Progressive Party won 131 of parliament’s 250 seats in April 24 snap elections, plans to form a new cabinet by early June. He has vowed to end state support of unprofitable companies and downsize the public administration with the support of the International Monetary Fund. Vucic expects growth to significantly pick up after the government sold the Zelezara steel mill to China’s Hebei Iron & Steel Co. last month.

The European Commission, in its Spring Economic Forecast published Tuesday, raised its forecast for Serbia to 2 percent in 2016 from 1.6 percent.

“GDP growth is forecast to accelerate, supported by robust investment and export performance” as well as marginal recovery in private consumption, the commission said, adding that the economy is “exposed to multiple external risks” including international capital flow reversals and moves in oil prices. “Fiscal risks remain elevated and government debt is still set on an upward trend trajectory.”

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