er and business confidence low in the next two years, and particularly in 2015-2016. Fifth, exports might come under increased
pressure due to a weak EU recovery, struggling SEE markets and a
sharp slowdown in CIS markets, particularly Russia. Sixth, the recent surge in the value of the Swiss franc has emerged as another threat which could affect purchasing power of CHF borrowers,
banks’ profitability, lending activity. Seventh, the South Stream gas
project was cancelled by Russia in late 2014. Eighth, the 2015 state
budget is focused on fiscal consolidation and austerity, which is
never good news for short-term domestic demand.
Due to big budgetary pressures and the need to eliminate subsidies for loss-making state firms (€ 1bn per year), Serbia will be selling almost 600 companies in its portfolio - the new law says sales
should be completed by the end of 2015.
The new austerity-focused 2015 state budget projects a consolidated budget deficit of 6% (estimated deficit in 2014 was 8% of GDP).
The 2015 state budget was recently praised by the IMF as fully in line
with previously agreed policies between the IMF and Serbia. There
have been renewed pressures on the dinar since mid-2014 (which
averaged 117.3 to the € in 2014 and it was 113.1 to