Friday, April 01, 2005

Serbia could see a recession

BELGRADE -- Thursday – Experts of the Institute for Economic Research say that Serbia could enter a recession if its economic development continues at the same slowed pace. “All economic indexes since the beginning of the year have been negative and a cure does not exist.” Sasa Djogovic, institute official, said. He said that high public spending, induced by delays in the restructuring of large public systems, along with inflatory pressure and expensive credit, de-stimulates economic stability, which is trying to keep to the foreign exchange rates restrictive politics in vain. “The foreign exchange rates are currently de-stimulating exports.” Djogovic said, adding that the fixed exchange rate set in 2001 should have been kept for no longer than one year, and then should have been left to follow the market’s trends. “The Serbian National Bank is forced to use exchange rates for reaching macroeconomic stability, which has not worked as a method in any other country.” Djogovic said. “The danger of a recession is a consequence of the trend of the fall of industrial production in the first two months of this year by almost two percent and the disproportionate growth of income and economic events. The chronic lack of liquidation of the Serbian economy additionally is made worse by the value-added taxes, and businesspeople, while waiting for those taxes to come back to them, are relying on expensive credit and loans.” Djogovic said.

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