Serbia’s New Growth Agenda : Investment for Growth
Because of its difficult starting position in transitioning to a market economy, so far macroeconomic policy in Serbia has mainly been concerned with achieving stability. At the start of its transition in 2001, Serbia was practically bankrupt, burd...
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| Format: | Report |
| Language: | English |
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World Bank, Washington, DC
2020
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| Online Access: | http://documents.worldbank.org/curated/en/842791585547764962/Serbia-s-New-Growth-Agenda-Country-Economic-Memorandum-Investment-for-Growth http://hdl.handle.net/10986/33565 |
| Summary: | Because of its difficult starting
position in transitioning to a market economy, so far
macroeconomic policy in Serbia has mainly been concerned
with achieving stability. At the start of its transition in
2001, Serbia was practically bankrupt, burdened with old
overdue debt and huge arrears in budgetary payments,
especially pensions. At the end of 2000, public debt was 175
percent of GDP and external debt was 128 percent. In both
2000 and 2001, inflation was over 80 percent. High inflation
and external imbalances were the main concerns all the way
through the global financial crisis (GFC). The GFC (as well
as external shocks) brought multiple recessions between 2009
and 2014, and a major widening of the fiscal deficit. Since
2014, the focus has been on consolidating public finances,
in addition to keeping inflation low. While macroeconomic
stability is a necessary precondition for growth, the
question is whether Serbia can do more to create a
pro-growth environment. Serbia has succeeded in keeping
inflation low over recent years; the current account deficit
(CAD) is now low enough to be manageable and is almost
entirely financed by non-debt-creating flows; large fiscal
deficits have been converted to a surplus; and public debt
is heading downward. However, growth is still meager. To
ensure that the Serbian economy grows more quickly, the
focus should be on increasing investment—both private and public. |
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