EC: First signs of economic recovery in Serbia

BRUSSELS -- Serbia has shown the first signs of economic recovery this year, but serious challenges still lie ahead, the European Commission said in its quarterly report.

The report, presented in Brussels on Tuesday, says Serbia's economic growth was 2.7 percent in the first half of the year, which is 0.2 percent more than in the same period last year, mostly because of the export of cars from the Fiat plant in Kragujevac.

On the other hand, demand went down in Serbia, bringing about a stagnation in import, and investments are expected to continue to drop because of more expensive loans, the report says.

Despite that, strong export will prevail, so the balance at the end of the year will be positive, the EC stated in the report.

According to the document, 2013 was good for the farmers in Serbia as well, but experts have noticed that the industries not related to the automotive, pharmaceutical or petroleum sectors are recording continuously poor results, which indicates that the current recovery is fragile.

EC experts said that Serbia began structural reforms in 2013, but predicted that the process would be slow and risky.

They also think unemployment will stay high in Serbia for some time because they expect new layoffs during restructuring in non-profitable government companies.

Serbia's debt is on the way to exceed 70 percent of GDP and the growth will continue if the painful structural reforms are postponed, which could threaten the entire program of economic consolidation, the report says.