Optimism about Serbia’s economy may be premature

Subject

The Serbian economy.

Significance

There are signs that the long-suffering economy is improving, encouraging hopes that it has turned a corner. However, most observers have been revising their growth forecasts for 2017 down to about 2%.

Impacts

• Serbia has yet to decide whether to seek a new IMF arrangement for when its stand-by agreement expires in February.
• The size of increases in public sector salaries and pensions may threaten hard-won fiscal gains.
• Political stability has thus far been preserved despite a challenging economic environment.
• There is a risk of social unrest if an upturn does not materialise in 2018.