BELGRADE (Serbia), May 13 (SeeNews) - Serbia's central bank, the NBS, expects the gross domestic product (GDP) of the country to contract by about 1.5% in 2020 due to the coronavirus crisis and to recover rapidly by growing 6% in 2021, it said on Wednesday.
Net exports will contribute positively to the economic growth this year, narrowing the current account deficit to around 5% of GDP, while domestic demand will be a negative contributor, the central bank said in its May inflation report.
"Just like the majority of other European countries, Serbia will feel the strongest impact of the crisis in Q2, with transport, tourism and hospitality suffering the strongest blow. As containment measures are eased, H2 will see a recovery, propped up by the adopted monetary and fiscal stimuli," the central bank said.
The annual inflation will return within the 1.5%-4.5% target band in mid-2020, backed by the wearing off of the vegetable prices base effect, and will move around the lower bound of the target until the end of the year, NBS noted.
"Thanks to the achievements of several years of responsible economic policy, we have bolstered our resilience and preserved favourable medium-term growth prospects, which allowed us to take comprehensive measures in order to offset the negative effects of the pandemic," central bank governor Jorgovanka Tabakovic said.
In the May 2020 edition of its Regional Economic Prospects report, the European Bank for Reconstruction and Development (EBRD) said Serbia's GDP is expected to fall by 3.5% in 2020 due to the Covid-19 crisis, before rising by 6.0% next year. The EBRD made the forecast in the May 2020 edition of its Regional Economic Prospects report, reversing its November 2019 projection for economic expansion of 3.5% in 2020.