BELGRADE (Reuters) – The war in Ukraine is expected to weigh on Serbia’s economy, presenting global problems such as supply chain disruptions and rising commodity prices, the International Monetary Fund said on Tuesday.
Russia describes its military action as a “special military operation” to demilitarize and “denazify” Ukraine. The kyiv government and its Western allies call it a baseless pretext for an invasion.
The conflict presents a significant economic shock to global economic prospects, including Europe and Serbia, the IMF said in a statement after completing its review of a non-financial and advisory agreement with Belgrade.
“This is expected to weigh on Serbia’s economic recovery due to supply chain disruptions, higher global commodity prices, effects on global financial conditions, lower consumer confidence and growth. trading partners,” he said.
The lender said Serbia’s medium-term outlook, “although uncertain, remains favourable, supported by the authorities’ commitment to structural reforms.”
“Immediate political priorities are to preserve macro-fiscal and financial stability,” he said.
Due to the COVID-19 pandemic, the Serbian economy contracted slightly in 2020 and rebounded by 7.4% in 2021.
Driven by global food and energy prices, Serbia’s inflation rose to 8.8% in February. Core inflation remained at 4.4%.
The IMF said Serbia’s fiscal performance in 2021 was better than expected, boosted by the recovery of tax revenues.
Last year, the budget deficit narrowed to 4.1% of gross domestic product and public debt fell to 57.2% of GDP. Serbia’s economy is expected to grow by around 4.5% in 2022.
To ensure stability and growth, the government in Belgrade, which faces general elections on April 3, should “preserve macro-fiscal and financial stability and mitigate the impact of the ongoing external shock”, the government said. IMF.
“While the magnitude of the impact is difficult to predict at this stage, (the IMF) staff will revise growth projections downward from the previous review, with downside risks,” he said. he declared.
(Reporting by Aleksandar Vasovic; Editing by Nick Macfie)
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