Macroeconomic Forecast Serbia

Serbian industrial output contracted 17.1% y-o-y in January, below December's 8.9% contraction. Production of 'electricity, gas and water supply' (which accounts for 18.2% of output) rose by 0.3% y-o-y. However the two other components of industrial output registered a much sharper decrease. Indeed, 75.8% of industrial output is comprised of 'manufacturing' which contracted by 24.5% y-o-y, while 'mining and quarrying', which accounts for 6.0% of total industrial production contracted by 7.7%. Going forward, we expect Serbian industrial production to continue to fall, with BMI projecting an end-2009 figure of -5.0% y-o-y. Our bleak outlook for industrial production is based on our forecast of recessions in Serbia's key trade partners including the eurozone and members of the Central European Free Trade Agreement (CEFTA).

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