World Bank: Serbia to End 2020 in Recession, Number of People Living in Poverty to Increase

The World Bank expects Serbia to end 2020 in recession, with a GDP drop of 3%, whereas a slow recovery would begin 2021, according to the updated WB Economic Report for Europe and Central Asia.

In the report, the World Bank says that the coronavirus pandemic and the accompanying measures aiming to suppress its effects have a strong impact on the Serbian economy, which it expects to end the year in recession, with a projected GDP drop of 3%.

The report says that a slow recovery will begin in 2021. It adds that Serbia should continue working on removing the obstacles to the growth of the private sector, which are a consequence of a weak administration and bureaucracy – the report says.

The inflow of investments will slowly return to the previously reached levels, whereas the impact of the pandemic on the labor market, when it comes to employment and salaries, will be more visible later in 2021.

In the medium term, in 2022 and 2023, the economic growth will return to the previously projected levels, the World Bank says in the section of the report dedicated to Serbia.

According to the report, the medium term prognosis for Serbia, however, depends on the international epidemiology situation, the quickness of the structural reforms in the country and the political situation.

It is expected that one of the consequences of the pandemic will be a slight growth of people living in poverty in Serbia.

The report says that the poverty line for Serbia is set at a daily income of USD 5.5, so it is expected for the share of people living in poverty to increase from 18.2% to 18.9% – the report says.

It also notes that the poor households and the households considered “vulnerable”, as they rely on self-employment or have members working under precarious labor contracts, will be slower to return to the income levels from before the crisis.

The WB Economic Report says that regional disputes and slow progress toward the EU membership could also have an impact on Serbia's attractiveness to investors and postpone the investments in infrastructure and other sectors.

Svetska Banka-WB Beograd

recession

GDP

GDP drop

World Bank Economic Report

coronavirus pandemic

growth of the number of poor people

number of poor people