After floods, Serbia to "definitely fall into recession"

After floods, Serbia to "definitely fall into recession"

Even without the impact of the floods, the deficit would have been over eight percent, Vučković noted.

"For that reason, a reaction is needed. If the government introduces tough measures - with salary cuts already announced - the effects can be satisfactory by the end of the year," Vučković said.

At this moment, any forecasts regarding the budgetary cuts required would be unrewarding, but they should definitely amount to around one percentage point, or EUR 400 million, he said.

The areas that will contribute to the negative GDP growth rate the most are agricultural production and the industry, in particular the energy sector, MAT author Miladin Kovačević said.

The potential drop in agricultural output is estimated at 10-18 percent compared to last year, while industrial output could drop by around three percent, Kovačević explained.

He described budgetary trends in the first four months of 2014 as worrying.

"The deficit in the first four months amounts to RSD 91.7 million - half of the projected national deficit for 2014," he said.

The adopted amendments to the law on taxes and contributions are a good measure, but will not result in a significant boost in employment, Kovačević said.