Effects of the global economic crisis as in other countries in the region are transferred to all segments of the real sector in Serbia.
Macroeconomic developments in the period January-April are characterized by unfavourable tendencies that started in the second half of 2008. A drop in economic activity hit most industry, export, import, transport, and internal trade. There is also slowing down of growth of household demand, foreign trade activity, and high fiscal deficit. According to RDB estimates, a drop in GDP in Ql 2009 relating to Ql 2008 stands at 5.4%, and in the second half at 3.0%.
International Monetary Fund on the basis of an extended stand-by arrangement approved to Serbia on May 15 2009 EUR 2.94bn (USD 3.98bn) which are exclusively earmarked for strengthening of forex reserves of the NBS and thus for maintaining of macroeconomic stability. The first installment of EUR 788m has been transferred to the account of the NBS, and by the end of 2009 two more installments of about EUR 2.15bn will be withdrawn.
Economic development. Unfavourable tendencies in turnover of goods abroad which began in the fourth quarter of 2008, under conditions of the global economic crisis, continued into 2009.
Total foreign trade of goods in January-April 2009 amounted to USD 5.4bn, which was by 26.1% down on the same period 2008. The export of goods was down by 24.3% and the import by 27%. Foreign trade deficit of USD 1.9bn was generated and it was by 29.4% down on the same period 2008. Foreign trading was the greatest with members of the European Union (more than a half of the total trade - 53.4%). In April goods was exported to the amount of EUR 456.5m, which was down by 25.6% on April 2008, and by 9.9% on March of the current year. Imports equaled EUR 938.1m and Were down by 31.2% on April 2008, and by 11.8% on March.
The physical volume of industrial output in Jan-Apr 2009 on the same period 2008 fell by 17.8%. The fall of output was recorded in all three industrial sectors: Manufacturing, of 22.5%, Mining and quarrying, of 9.1%, and Electricity, gas and water supply, of 3.4%. The physical volume of industrial output in April 2009 on April 2008 was down by 21.1%. Sections that contributed most to the fall of industrial output in April 2009 on April 2008 were: Manufacture of basic metals, Manufacture of chemicals and chemical products, Electricity supply, Manufacture of motor vehicles and trailers, and Manufacture of furniture. On condition that in the period to come positive effects of the undertaken measures begin to be visible, industrial output in Q3 2009 would record a somewhat more favourable performance.
In January-April labour productivity in industry was down by 9.7%, and in manufacturing industry by 13.1% in comparison with April 2008. A drop in productivity is caused by a decrease in the physical volume of industrial output.
In Ql 2009 the value of construction works was down by 11.0% (nominally) compared to Ql 2008, and in real terms by 17.0%. The value of contracted works in Ql 2009 was down by 45.5% in relation to Ql 2008 and so we can expect deceleration of construction activities in the course of 2009.
The physical volume of overall transport fell further by -13.2%, transport of passengers by -8.8%, and transport of goods by -24.2% in comparison with the first quarter of 2008. The volume of postal activities dropped a little in the first quarter (-2.2%) in comparison with the same period last year, which is the result of fewer delivered letters by -6.5%. The trend of a substantial increase in the volume of services of telecommunications continued in the first quarter of 2009 as well (37.9%). This is primarily a result of further intensive expansion of mobile telephony, which dominantly participates with about 90% in the structure of telecommunication services.
Retail trade turnover in Jan-Apr 2009 on the same period 2008 was nominally down by -3.2%, i.e. by -9.6% in real terms.
Tourist economy of Serbia over the first four months of 2009 registered a decrease in the number of tourist arrivals of 8% compared to the same period last year. In the category of domestic tourists the number of arrivals fell by 12%, while with foreign tourists the interest in Serbia increased by 2%.
Labour market. In the period January-April 2009 total employment fell by 0.9%, in enterprises, institutions and organizations by 0.8%, and the number of private entrepreneurs and their employees fell by 1.1% compared to the same period 2008. The largest decrease in employment at the level of activity was in manufacturing industry, of 6.1% (22,598 persons), and agriculture, hunting, forestry and fishery, of 6.2% (3,104 persons). The number of the unemployed in April was 762,674 persons, up by 0.6% on March. In the period January-April 2009 there was the total of 217,342 job vacancies announced, which was by 16.4% down on the same period 2008. 206,779 persons started working, which was by 13.2% less than in the same period 2008. 77,336 persons were employed through the National Employment Service and 129,443 persons through fluctuation.
In the period January-April 2009 the tendency of decelerating growth of average gross and net earnings continued — they were up in real terms by 2.8% and 2.7%. Average disbursed net earnings in April amounted to 32,571 dinars, nominally up by 7.3% and in real terms by 6.2% in relation to the previous month, whereas relative to the same month 2008 it rose nominally by 12.3% and in real terms by 3.8%. Regional differences between disbursed earnings in April 2009 are still very prominent. Viewed by districts, the highest average net earnings was disbursed to employees on the territory of the City of Belgrade (40,604 dinars — 24.7% above the average of the Republic), and the lowest on the territory of the Toplica District (21,943 dinars — 32.6% below the republic average).
Prices. In January-May 2009 retail prices rose by 8.7% (May 2009/ December 2008), while their year-on-year rise stood at 10.4% (May 2009/ May 2008). Viewed structurally, the most intensive rise over the first five months of 2009 was that of agricultural products because of the seasonal factor, tobacco prices, services, beverages, and industrial non-food products. Inflation measured by the Consumer Price Index that since 2009 has been the official measure of inflation in Serbia in January-April 2009 stood at 4.8%.
Monetary developments. Since early 2009 the NBS has relaxed its monetary policy and the key interest rate at end April 2009 was lowered to 14%. The trend of decelerating credit activity of banks which began in 2008 also continued. Major monetary aggregates at the end of April 2009 fell in relation to end 2008 with the exception of the monetary aggregate M3. The total household savings at the end of April 2009 reached 463.6bn dinars (foreign savings equaled 454.3bn dinars and dinar currency 9.3bn dinars) and in relation to end December 2008 went up by 9.5% (foreign currency savings was up by 9.9%, while the dinar savings went down by 5.8%).
Balance of payments. The balance of total foreign transactions registered a negative outcome of EUR 240.0m, while in Ql 2008 on this account surplus of EUR 32.5m was registered.
Foreign direct investments - net amounted to EUR 643.3m and on Ql 2008 were down by 22.6%. A dominant part of the investment inflow was realized in February and refers to the sale of 51.0% of shares of NIS (to the amount of EUR 396.1m). Russian Federation is the major investment partner of Serbia in Ql 2009.
External debt by the end of Ql 2009 amounted to EUR 21.4bn and in comparison with Q4 2008 it was down by EUR 355.4m (1.6%). For matured annuities to foreign creditors EUR 667.7m was paid.
Foreign exchange reserves of the NBS in April 2009 amounted to EUR 8.1bn and they were down on March by only EUR 2.8m, and on December 2008 by EUR 50.2m. Average depreciation of the exchange rate in Ql 2009 stood at 9.6% and the dinar exchange rate oscillated within a substantial range of 89.5-96.3 RSD/EUR. In early Q2 the foreign exchange market was relatively stable. In May the national currency oscillated against the euro within a moderate range (of 94.10-95.23 EUR/RSD), and against the dollar within a substantial range (of 67.55-71.64 USD/RSD).
Privatization. In the period January-May 2009 through tender and auction privatization 56 companies were sold, generating EUR 64.5m of revenues and providing EUR 36.98m for investment. Through tender privatization the following companies were sold: Novosadska fabrika kabela Novi Sad, Jugoslovensko recno brodarstvo Belgrade, and NIN doo Belgrade.