Analysis 12 Jun 17

Drop in Electricity Production May Stifle Serbia's Economic Growth

The decline in electricity production in early 2017 will likely impact economic growth, according to experts who warn Serbian state energy company is in urgent need of reform.

Stevan Veljovic

Energy Minister Aleksandar Antic told Tanjug news agency on May 3, that EPS will invest 250 million euros in Kolubara to fund the maintenance of equipment and the opening of three new mines. Photo: Beta 

The government’s predicted economic growth rate of three per cent for 2017 has already been called into question, due to an unexpected drop in electricity production.

Electricity production dropped by 14.5 per cent in the first quarter of the year, with the sharpest decline in production – 22.9 per cent – recorded in March, according to the state Office of Statistics.

They recorded a meagre one per cent growth of the Serbian economy, expressed as GDP, in the first quarter of 2017. By comparison, throughout 2016 GDP never dipped below two per cent, which indicates this year’s growth rate might be lower than projected.

The production and distribution of energy is one of the key components of industrial production, along with agriculture, manufacturing, mining and other sectors, all contribute significantly to the country’s overall economic growth rate.

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