Serbia
Economic Overview
The Republic of Serbia's macroeconomic parameters in 2004 improved compared to 2003. Overall economic activity was on the rise, which resulted in a 7.5% GDP growth, a 7.1% increase in industrial production, and a 19.8% rise in agricultural production, combined with favourable trends in the service sector. As a result of soaring oil prices on the international market and other external shocks inflation surpassed its envisaged level.
Aggregate spending and import demand experienced a more robust rise compared to domestic supply growth. This affected the deepening of structural imbalances and increased foreign trade and current account deficits.
In 2004, employment rise was minimal. According to data by the Republic of Serbia's Statistical Office, the number of employed individuals at the end of December 2004 amounted to 2,025.8 thousand, which represented a 0.3% increase compared to the end of 2003. The number of registered unemployed person was also on the rise. Overall, the unemployment rate stood at 18.5%.
Foreign trade balance deficit in 2004 was up by 52.6% from USD 4.618 mln. in 2003 to USD 7.047 mln. The registered export of goods rose from USD 2.755 mln. in 2003 to USD 3.701 mln. in 2004, while import of goods grew from USD 7.473 mln. to USD 11.139 mln.. Due to a slowdown in export growth as compared to import growth, the export-import ratio declined from 36.9% in 2003 to 33.2% in 2004. Current account deficit rose by 66.5% from USD 1.757 mln. in 2003 to USD 2.926 mln. in 2004.
Economic activity in the Republic of Serbia in 2005 was on the decline compared to 2004, coupled with higher than planned inflation. Slight growth was registered mainly in the fields of industrial and agricultural production, and construction production, while trade and a greater portion of the services sector saw a rise in the real turnover volume. A favourable development in 2005 was the narrowing of the external current account deficit and the turning of the budget of the Republic of Serbia from deficit into surplus. In the fiscal domain, the year was predominantly characterised by the VAT introduction, which resulted in significant increase of government revenues. Measured by retail price growth, inflation hit 13.7% in the first ten months of this year, chiefly driven by the increase in retail prices following VAT introduction, higher electricity, public utility and other services prices, as well as the surge in world oil prices and retail prices of oil derivatives.