IZIT: Recession certainty in next year

BELGRADE - The Serbian economy will probably face recession in the year to come, due to the reform measures and fiscal consolidation, including cuts in public sector salaries and pensions, shutdown of a number of restructuring companies and the consequent workforce decrease, the Belgrade Institute for Market Research (IZIT) states.

Addressing a news conference on Friday, IZIT economic analyst Sasa Djogovic said that in addition to the implementation of necessary reforms, the platform for future economic development needs to be created in 2015.

The local demand dropped this year already, and the drop will persist next year because the purchasing power will continue to drop due to the lower personal income and increased number of the jobless, he said.

On the other hand, the restructuring companies, some of which will be closed down, still contributed to production and their closing will signify lower production output, he noted.

Inflation will probably remain low, although increase may be recorded with certain government-controlled prices like electricity bills, Djogovic said.

An increase in economic activity can be expected only in the construction industry and agriculture in 2015, he noted.

Djogovic pointed to two positive signals, the scrap of public enterprise subsidies and the shutdown of around 100 restructuring companies for which no bids have been submitted, which will constitute additional relief for the budget.

Photo Tanjug Video, camera operator Igor Skendzic