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Book

Eastern Europe Economic Update - Overcoming Imbalances in Croatia, Serbia and Slovenia

M.: Sberbank CIB, 2014.
Gavrilenkov E., Stroutchenevski A., Lomivorotov R., Konygin S.
Under the general editorship: Gavrilenkov E.
Croatia. Output decreased by 0.5% y-o-y in 3Q14 and will probably decline by the same amount for the full-year 2014, making it the sixth consecutive year of decline. The country managed to improve its current account balance, mainly due to the export of services, but the large budget deficit and inefficient state-owned sector is still a problem. We expect the burden of the adjustment to fall on the new government that will be appointed after the parliamentary elections at end 2015 or beginning of 2016. Serbia. GDP contracted by 3.6% y-o-y in 3Q14 and will likely be down 2.0% in 2014 as a whole. The Serbian economy was heavily affected by floods and slowing demand from its major trade partners in the EU. The country remains a twin-deficit economy: the budget deficit could get close to 7.8% of GDP this year, while the current account deficit may stay around 6.3% of GDP. The dinar weakened as a result. Fiscal consolidation is a necessary condition in the EU accession process, but its implementation will probably entail another year of economic decline in 2015. It also means the currency will probably continue to weaken further next year. Slovenia. The economic situation started to improve at end 2013 and remained positive during 2014, as GDP rose 3.2% y-o-y in 3Q14. Slovenia enjoys a current account surplus, due to its large manufacturing base, although its fiscal position was negatively affected by the banking crisis. We expect economic growth to continue in 2015, although the large amount of NPLs in the corporate sector is still a threat to stability.
Eastern Europe Economic Update - Overcoming Imbalances in Croatia, Serbia and Slovenia