Macro: COVID-19 Update Serbia: New restrictions, as new infections increase

After the coronavirus peak in April, the state of emergency was cancelled on May 6, and public life was restored. However, the daily number of infections started climbing and new countermeasures are being put into force locally.
The economic package worth EUR 5.1 bn brought support to employment and liquidity in the real sector, the last support measure still active, the deferral on the payments of social contributions and taxes on wages will last until 2021. No further measures are to be expected to support the economy, as the current stimuli package has left its mark on the public debt and general budget deficit.
The decline of industrial output lost pace due to the abolishment of the state of emergency and the governments measures, also supported by growing retail sales in May.
The Central Bank has cut the base rate three times (100bp cumulative) to 1.25% amid falling CPI and gloomy global economic outlook and FX stability was managed via ample NBS FX interventions.
We still expect GDP to decline by 4% in 2020 and infrastructural investments to be a key contributor to the economic recovery.

This Research was produced and first published by Raiffeisen Bank International AG which is supervised by the Austrian Financial Market Authority and the National Bank of Austria.