The basic characteristics of economic flows in March 2005 are as follows

Beside increased production capacities for 16% regarding February, physical extent of industrial production was less for 6,2% than in March 2004, respectively for 3,4% in comparison with situation from the first quarter of the previous year. It is the result of the stronger non-liquidity caused by introduction of PDV during this year. Just because of lack of financial support and impossibility of purchasing intermediates and raw materials, smaller or bigger stoppages in production processing were notified which, from one side dropped the level of usage of production capacities and reduced the volume of production activities and from the other, increased the expenses of production, specially the fixed component of these ones and with this additionally lowered the price concurrency of the products at the market.

First evaluations lead to the conclusion that 2005 will not be the bumper crop year at least when having wheat in mind. Namely, wheat seeded grounds are smaller for 14% and more than 65% surfaces under wheat were seeded out of the optional deadlines.Anyhow, it is calcu-lated that the harvest of bread wheat will be about 3,5 – 3,7 t/ha which, with seeded surfaces satisfies domestic needs. In the first quartal of this year, export increased for 52,2% respectively from USD 653 bil. to USD 994 bil. while the import was lower for 11% or from USD 2,246 bil. to USD 2 bil. The coverage of import by export reached by this 49,7% which is the significant improvement regarding the same period last year when this coverage was 29,1 %. The appreciable increase of export activities is the result of terminated process of restructuring and privatization of the enterprises during previous years. On the other side, drop of import is a result of excessive purchases from abroad during December 2004 done with the purpose to avoid paying PDV. By this measure the stocks were provided at lest for the first quartal of this year. But it must be pointed out that another result of reduction of import is the aggravation of non-liquidity from the beginning of 2005, shown by the fact that from 200 enterprises from different sectors of industrial production, 54% registered diffi-culties in purchasing intermediates from abroad during March this year. That had its negative repercussions to the dynamics of the total industrial production in Serbia. However, beside the increased growth of export, the Serbian economy, in the first three months of this year,marked foreign trade deficit which amounted to USD 1.006 bil . The dynamics of demand from the domestic market in the reported month had a positive flow. Namely, after the previous month drop, a noticeable inflow growth of domestic orders was registered in March. Opposite of this, after February growth the demand from the foreign markets again registered a drastic drop which, in the coming months could have negative influence at the dynamics of export activities,on the first place with outpayments of current growth intensity of export.

Beside the slight growth of the monetary mass M1 from Din 107.270 bil in February to Din 109.971 bil. in March this year, it is still 1,1% lower regarding December level,which confirms the continuation of restrictive monetary politics led by NBS with an aim to soften inflatory pressure.

Free assets of business banks are lowered from Din 7.496 bil. in February to Din 5.773 bil. in March this year, respectively for even 23%. Regarding December 2004 drop of liquid assets of business banks amounted to enormous 46,8%. This is the best indicator of restrictive measures of credit-monetary politics led by NBS but also of the negative consequences which this politics has at the situation in economy through strengthened non-liquidity and drop of the production activities. Sadly, but such streaming of monetary politics must be kept further on to prevent explosion of inflatory hot- spots which could cause far more negative effects at the total economic flows in Serbia.

Total foreign currency in March were USD 5.081 bil. what is for 0,5% less than a month earlier, respectively for 1,3% less than in December 2004. Foreign currency reserves of NBS were Din 4.311 bil. which is 1,5% at the lower level than in the previous month but still 1,6% higher regarding the last year December. On the other hand, the foreign currency of commercial banks increased from USD 729 bil .to USD 770 bil. in the reported month or for 5,6%. However, it is still for even 19,1% lower level than in December 2004.

It is still present a continuos trend of depressiation of foreign course Dinar. So, the domestic currency in March, compared to the previous month to Euro depressed for only 0,7% and regarding December 2004 for 2,7%. It is obvious that the intense of fluctuation of foreign currency is significantly slower than is the growth of retail prices which is untenable on long terms and forms another export disturbance being also a significant stimulation for import.

The average net salary in March was Din 15.863 which is for 3.7% nominally, respectively for 2,3% higher in real terms than a month before. This is a result of significantly more intensive growth of salaries in non-economy than in economy. The employees in non-economy with average net salaries in March of Din 18.771 realized their nominal growth of 6%, respectively 4,5% regarding the previous month.Opposite of this, in economy the average net salaries were rised from Din 14.244 in February to Din 14.578 in the reported month, respectively for 2,3% nominally or 0,9% in real terms.

The prices of producers of industrial products were in March for 0,4% higher then in the previous month. According to the latest RZS data, the same intensity of retail prices growth was registered as it was a month earlier. So in April the retail prices were increased for 0,8% regarding March level ( in January for 2,7% and in February for 1,5%). Beside registered dropping of their growth in comparison with the first two months of this year, that absolutely does not mean that inflatory tension softened down. On the contrary, the consumption on all levels is still high and further increase of prices for electric energy and agricultural products (generally seasonal increase) are expected. Regarding December 2004 the retail prices rised for even 5,9% and already now it is certain that this year projected inflation rate of 9,6% is surpassed.