Serbia is 100 years behind the STRONGEST

In order to reach the average standard of the most developed countries that are G7 Serbia will need 100 years, provided that it would grow at average growth rates it recorded after the global financial crisis. If, however, the Serbian economy grew at speed of pre-crisis times, that period would be slightly below 20 years. In the end, the only optimistic yet possible scenario is for the economy to grow at post-crisis rates, increased due to good state governance, in which case Serbia would reach the G7 average in 40 years. This is the result of an analysis presented in the Transition Report of the European Bank for Reconstruction and Development for 2019/20. On average, for the countries covered by the EBRD and those being ones in mostly Central and Eastern Europe and the Middle East, reaching the standard of developed countries has been extended by 25 years after the crisis. According to EBRD Managing Director for Economics, Policy and Governance, Mattia Romani, the average annual growth rate of the region before the crisis was 5.3 percent, and only 1.5 percent after the crisis. „To an extent this is certainly a consequence caused by financial problems, but I think this is, for the most part, a crisis of confidence. Good governance and strong institutions are a must have in order to restore trust,“ Romani evaluated. Poor governance leads to corruption and unfair business conditions, which negatively affects economic growth. Governance itself, Senior Economist at EBRD Helena Schweiger explains, is related with authorities, decision-making and their responsibility at all levels. „Serbia had very poor governance in the 1990s when compared to developed economies and most developing countries. Later, a dramatic progress was made in the quality of institutions, though from a low initial level. However, this is still below the level of Central and Eastern European countries and far below the level of developed countries,“ Schweiger evaluated. Anyway, the EBRD lowered Serbia’s economic growth estimate from 3.5 percent to 3.2 percent in 2019 and to 3.5 percent in 2020. This is interesting because the National Bank of Serbia did just the opposite a few days ago and increased this year’s estimate from 3.5 to 3.6 percent.

Izvor: Danas

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