Structural reform key to further regional development

At a meeting in Bečići, the President of the Economic Council of Serbia Aleksandar Vlahović declared that the key condition for business development in the whole region is structural reform.

Vlahović said that the pace of its implementation in the next two or three years will be a crucial risk for Serbia on the way to sustainable growth.

“For our national economies in the whole region, the greatest problem is the heritage of structural inefficiency and the fact that not much has been done in this regard”, said Vlahović at the opening of a regional conference with the title Efficiency of EU Accession and Improving Regional Competitiveness.

Citing the example of Serbia, Vlahović said that right up to 2008 all structural problems had been masked by the high flow of foreign direct investment.

Not until 2008, he said, did the global crisis clearly lay bare the essential deficiency of our economy, meaning structural inefficiency, the unfavourable economic structure of regional economies dominated by the trade and service sectors.

Vlahović thinks that the Serbian government did not use the first period of the economic crisis to complete structural reforms, but took refuge in raising the public debt to finance consumption.

He asserted that in recent years Serbia has broken with such policies, for the first time basing fiscal consolidation on austerity measures which, according to his speech, has led to very good fiscal results.

“Our deficit today is half its 2014 level and if the dollar/euro relationship had not changed we would probably have the same level of public debt as last year”, said Vlahović.

He declared that in the coming two or three years the pace of fulfilling structural reform will be a key risk for Serbia on the road to sustainable growth.

The President of the Montenegrin Chamber of Commerce Velimir Mijušković said that a national approach is insufficient and that a regional one is needed to solve the systemic problems facing the region`s economies as this is the only way to raise competitiveness in West Balkan countries.

“With insufficiently strong institutions, internal weaknesses, global competitiveness seems unattainable, and a particular problem is the high unemployment rate in the region of over 20 percent, while youth unemployment exceeds 45%”, he said.

Mijušković insisted that the region has to deal with these questions in the future.

Speaking about macroeconomic indicators in Montenegro, he said that the growth rate would reach 3.5% of GDP in 2015 and inflation 0,3%, that public debt is rising and now lies at about 60% with unemployment at 18%, and that the trade deficit resulting from weak business competitiveness is a substantial problem.

“For our further long-term growth we need economic growth in the whole region as this increases our chances”, said Mijušković.

Translation provided by: www.halifax-translation.com