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Recent Macroeconomic Developments Orhan Niksic The World Bank October 6, 2011

Recent Macroeconomic Developments Orhan Niksic The World Bank October 6, 2011. Internal and external developments in 2010 shook the economy. GDP contracted by 1.4 percent Public expenditures and fiscal deficit increased substantially (2pp, 3.5 to 6.5).

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Recent Macroeconomic Developments Orhan Niksic The World Bank October 6, 2011

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  1. Recent Macroeconomic DevelopmentsOrhanNiksicThe World BankOctober 6, 2011

  2. Internal and external developments in 2010 shook the economy • GDP contracted by 1.4 percent • Public expenditures and fiscal deficit increased substantially (2pp, 3.5 to 6.5). • International food and oil prices fueled inflation.

  3. 2011: The economy is rebounding • GDP growth projected at 7 percent • Inflation is coming down • Fiscal deficit large, but smaller than projected earlier. • IMF program on track

  4. What is driving growth? • Gold • Power generation • Other industrial sectors (textiles and mineral processing) • Transport and communications, trade • Government sector

  5. Is growth sustainable? • Some sources of growth expected to dry out next year • External demand will be weaker & no fiscal stimulus • Structure of growth will have to change

  6. Growth prospective • It will moderate • Reforms are necessary to stimulate growth: • Governance • Macro-fiscal sustainability • Business environment • Privatization

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