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Economists: Serbian economy is in alarming state

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The Serbian economy is in an alarming situation, businessmen and economists said Wednesday, indicating that the lack of liquidity, “grey” economy, unemployment rate and public debt are all increasing while industrial production is in decline and adding that the economic crisis in Serbia will even worsen next year.

“The situation is alarming and we decided to send the conclusion from this meeting to everyone as a warning,” President of Belgrade Chamber of Commerce Milan Jankovic said at a business consulting conference on the topic of the Serbian economy in times of crisis and public spending, organized in Belgrade in cooperation with the Association of Belgrade Economists.

Jankovic said that the first thing that should be done was to cut taxes, because the state would soon have nothing to tax since more businesses are getting closed than getting opened, while illegal economic activity was increasingly present.

“There are only between 1,300 and 1,700 enterprises that carry the whole burden of taxation in Serbia,” said Jankovic, recalling data from a recent survey carried out by the Belgrade Chamber of Commerce.

Economic expert Mladjen Kovacevic believes that it is likely that the crisis in Serbia will intensify in the coming year.

He said that instead of the projected average growth rate of industrial production by 6.9 percent in the period between January and September 2011, the growth had been just 2.5 percent, and since April, the industrial production in the country had been steadily declining.

Kovacevic said that according to official data, Serbia’s public debt had been EUR 14.7 billion at the end of September, which was EUR two and a half billion more than at the end of last year. The ratio of public debt to gross domestic product nearly reached the legal maximum of 45 percent by the end of September, he added.

Kovacevic said it was absurd that this year, Serbia had done nothing to stop the irrational economic depreciation of the dinar, while Switzerland, although being one the most competitive countries in the world, had even introduced devaluation measures to reduce the value of its national currency this fall.

President of the Serbian Association of Economists Gojko Rikalovic said that it was probable that the economic crisis in Serbia would deepen over 2012 and that Serbia should be more focused on developing domestic resources, but also on creating a more efficient public sector with less spending.



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