Evaluation of the global economic flows in Serbia

Economic image of Serbia by the end of Februaray 2005 was characterised by following flows:

Phisical extend of industrial production was higher for 1,8% than in January. However, observed desesionised, the total level of production activities in industry during February was lower for 5,1% regarding the previous month. The former expectations that reliable signals for lasting recover of industrial production and strengthening of its competition on domestic and foreign markets do not exsist, are confirmed by this. To achieve such aim, the process of more effective restruction of industrial resources is necessary in order to bring Serbian economy to helthier base than it is now and this, of course, needs a certain flow of time.
Agriculture prouction is meeting spring seeding with very unenviable financial situation. Namely, beside the unpayable demands for sold products in the previous year, most of them have not yet been paid subventions for 2004. Those state subventi-ones transferred in this year amounted to 20 billions Euros.
According to the available data, in January 2005 appreciable drop of total forein trade activities is registered. This is above every-thing, the result of significant drop of import of even 74% regarding December level. From the record 1,657 bil. USD at the end of 2004 Serbian import dropped to 430 bil. USD in the reported month due to the application of WAT from January this year, so to avoid paying WAT at the imported goods, excessive amont of goods was purch-ased. Stocks were made for the folloing two to three months which will make a pseudo-creation of reduced gap between export and import during the first quartal of this year The coverage of import by export raised to fantastic 64,4% (in the previos month only 25% and in January of the former year 28,4%). So the present foreign trade results could be evaluated as atipical which in fact do not show the real movement of structure and dynamics of foreign trade activities. On the contrary,the present unchanged economic structure and macroeconomic environment with high degre of noncompetition with too high market liberalisation surely do not enable any noticable recover of foreign trade results from the previous year.
Demand dynamics from domestic market in the reported month registered negative trend. Naimly, after stagnation at the very low level in January, its drop to more lower degree was registered in February. Opposite of this, after the reduction of export orders inflow during the last two month, a more significant positive movement was registered in the reported month.
Even by the moderate growth of monetary mass M1 from 101,4 bil. Dinars in January to 107,3 bil. Dinars in February, it is still for 3,5% lower regarding last year December level which confirms the continuation of expressive restrictive monetary politics.
Deposited money increased from 62.763 bil. Dinars in January to 68.206 bil. Dinars in the reported month or for 8,8%. Regarding December 2004 this increase expressed in relative terms, was 3,3%. Just because of some stronger growth of non-cash transa-ctions in February regarding the previous month it was registered a moderate growth of monetary mass M1.
Cash money in flow in the reported month marked the growth but with much weaker intensity than the deposited money. In February cash money was increased for insignificant 0,6% regarding January level. Comparing December 2004 it is for the whole 13,5% less cash money in flow. He structure of monetary mass M1 is improved in this way. Namely, cash in flow share dropped from 40,6% in December 2004, respectively from 38,2% in January this year to 36,4% in February 2005. That means that there exsists a trend of wider use of non-cash assets of payment which causes further reduction of “gray” economy by impleme-ntation of WAT from January this year.
Liquid assets of business banks are increased from 3.979 bil. Dinars in January to 7.853 bil. Dinars in February this year, respectively for the whole 90,7%. At the first glance this increase looks big. However, if it is evident that in January the free bank assets registered a significant drop of 62,2%, and that beside Februry posiotive movement the level of liquid assets is still for 30,1% less than in December 2004 than we have an absolutely different position of free assets in business banks. It means that banks credit potency stays further on low and unsuficient, specially regrding needs of the chronicaly unliquid economy. This is of course the result of extremely restrictive credit-mone-tary politics, which is present in such proportion caused by permanent inflatory pressures and vast public consumption as a main hot-spot of these pressures.
Total foreign currency reserves in February were 5,105 bil.USD. It is for 1,9 % higher than a month earlier, but also for 0,8 less than in Decemeber 2004.Foreign curency reserves of NBS were 4.376 bil. Din which is for 2,6% higher than in January, respectively for 3,1% regarding December.From the other side, foreign currency reserves in comercial banks are reduced from 902 bil USD in December, respectively from 745 bil.USD in January to 729 bil USD in the reported month 2005.
It is still present a cintinuity of depresion of foreign course Dinar. So the domestic currency in February compared to the previous month to Euro, depressed for only 0,3% and regarding December 2004 for 2,1%.
The average net salary in February was 15.295 dinars which is for 7,2% nominaly, respectively for 5,7% in real terms higher than a month earlier. This is the result of signifivantly more intensive growth of salaries in non-economy sector than in economy. The employees in non-economy sector with average net salaries in February of 17.704 Dinars realised their nominal growth of 17,7% respectiveli almost 16% in real terms compared to the previous month. Opposite of this, in economy the average net salaries were rised from 13.925 dinars in January to 14.244 dinars in the reported month respectively for 2,3% nominaly (0,8% in real terms). Observed by activities the highest average net salaries are registered in the production of tabaco (45.261 dinar) finansial erventiones (38.627 dinars), insura-nce (35.533), activities of the organisations based on joinings (33.812), air port (33.1176 dinars), etc. From the other side the lowest salaries are registered in production of clothes and furs 92.973), processing and products of wood and pulp (3.137), production of textile fibre and cloth (3.938 dinars), production of leather and leather products, footwear (95.956 dinars) etc.
Average paid out pension in February was 10.084 dinars that means that it kept January level.. However it is 1,5 less than in the pevious month in real terms. Regardding last year Februaray average paid out pensions are increased for 18,95 nominaly (4,5% in real terms). But beside this it is clear that the spending power of retired people goes on being rather low that shows the fact that with the average pension cannot be covered the expences of the minimal egsistance and it is out of questein to cover the expencess of the standard “consumer basket”.