Economic streamings in August and by the beginning of September

Registered was the rise of physical extent of the industrial production. Namely, the level of production activities in August was increased for 5,5% regarding the month earlier, respectively for 8,3% compared to the same month of the previous year If seasonal factor is excluded, industrial production was higher for 0,6% compared to the level of July. However, observed cumulatively over the first eight month of this, according to the same period of the previous year, the physical extent of industrial production is in the negative zone further on, respectively it is lower for 0,7%. But, even this negative cumulative rate of industrial production is encouraging, since it is far more milder than it was during the first three months when it reached 3,4% or 2,1% in the first half of 2005..So the trend of gradual softening of industrial production drop is present. Negative tendencies are present in those sectors of production where the process of restructuring has just begun or they are exposed to disloyal competition.

This year production of wheat will reach 2 million tons which is for 27,1% less compared to the last year level. But, beside that it will be sufficient for covering domestic needs for that bread corn, since this year, owing to the presence of last year reserves is not necessary to create strategic reserves.

Owing to the available data, total volume of foreign trade exchange in the first seven months of this year was higher even for 11,6% regarding the same period of the previous year, This is the result of stronger export activities which grew , in the marked period of observation, from 1,699 bill.USD to 2.501 bill USD or for the whole 47,2%. Opposite of this, import was higher for only 0,6% respectively from 5.476 bill USD in the first seven months of the previous to 5.508 bill USD in the same period of this year. With this the foreign trade deficit in the period of January-July this year was with 3,007 bill USD lower for 20,4% regarding the same period of the previous year.

Evident is the growth of demand from domestic as well as from the foreign market. However, while the growth inflow of domestic orders was intensified the growth of export orders was significantly softened.

Moderate growth of monetary mass M1 was registered from 127,089 bill Dinars in July to 131.437 bill Dinars in August this year or for 3,4%. Regarding the level from the end of 2004 monetary mass M1 was increased for 18,2%. This is a result of noticeable growth of deposited money.

Deposited money was increased from 81,975 bills. Dinars in July to 86.611 bills. Dinars in the reported month of 2005 or for 5,7%. Regarding its December level it is increased for even 31,1% which points out the strengthening of deposited money participation in the structure of monetary mass M1 from 59,4% in December 2004 to 64,5% in July and 65,9% in August this year.

Cash money in flow in August reached the amount of 44,826 bill Dinars and for 0,6 was lower than it was the previous month. Also regarding December 2004 the drop of cash money is evident of 0,8%.With this, the level of cash money in flow in the structure of monetary mass M1 had the trend of thinning. Namely, from 40,6% at the end of the previous year and 35,3% in July this one, cash money dropped to 34,1% in the reported month 2005. That points out the trend of gray economy reduction, especially after introducing PDV but also with wider application of credit cards than it was a case in the previous year.

Free assets of the business banks reached in August the amount of 8.678 bills. Dinars which are for 1,1% lower amount regarding the previous month and for even one fifth compared to December level. That shows out a low credit potential of the business banks, which with great demand for financial assets influence the maintenance of high interest rates.

Foreign currency reserves of NBS and business banks, observed jointly, had growth from 5.146 bill USD in December 2004 and 5.433 bill USD in |July to 5.789 bill USD in August 2005..Otherwise said, total foreign currency reserves were increased for 6,6% regarding a month ago, and for 12,5% regarding the end of the previous year. This is primarily the result of foreign currency growth at the NBS, while the foreign currency reserves of the business banks are lower compared to the last month of the previous year.

Foreign course of Dinar versus Euro is keeping a tendency of mild depression. So in August according to the previous month the value of domestic currency versus Euro depressed for 1%. Regarding December 2004 Dinar lost 7% of its value.

Average net salary earning in Serbia in August was 17.928 Dinars which is for 1% nominally, and for 1,6% in real terms higher than in the previous month. However, according to December level average earnings were nominally higher for 3,4%, but also lower for even 6,2% in real terms. This point out that life expenses of the past period of time of this year had intensity of growth, which together with low economy activity and salaries as the result of this activity, caused that purchase power of earnings in Serbia at the end of August was lower than at the end of 2004. It is evident that the highest salaries are paid out in some significantly propulsive economy branches (tobacco industry and airway traffic) while the lowest earnings are reserved greatly for amortized sector of Serbian textile industry.

Average paid out pension in August reached the amount of 11.072 Dinars and was at the same level like in the previous month. But regarding the last year August the level of average paid out pensions was increased for 21,5%, and only for 5% in real terms. Also the growth was registered in case of comparison of this year August average paid out pension with the last December one. Namely, then the Serbian pension was higher for 12,5% nominally, respectively for 2,1% in real. But, beside that, with current pensions still can not be covered the expenses of minimum existence which very clearly shows their totally unenviable financial position.

Retail prices had in August a growth for 0,4% according to a month ago. With this the inflation in the first eight months of this year reached 10,6%. The average month growth rate of the retail prices in the period January-August 2005 was 1,26% and in case the present dynamic keeps going like this the inflation would reach 16,3% by the end of the year. The main cause of the current inflator tensions is the consumption on all levels, and specially the public one. Awakening of the inflation dragon was too, caused by external pressures(fuel and electricity), but the main inflator hot spot comes from overwhelmed public and personal consumption stimulated by rich assortment of bank credit offers.