The nominal gross domestic product (GDP) will exceed 60 billion euros this year, which is significantly more than the forecasted 56.5 billion euros. However, this increase is due to the acceleration of inflation with an unchanged exchange rate, and not to higher production this year, warns the Fiscal Council.
In the analysis of the budget rebalancing, this institution indicates that we will even produce less goods and services than initially planned.
The nominal increase in GDP is a consequence of the fact that the price of those manufactured goods and services is now significantly higher.
The change in nominal GDP in relation to original expectations can be simplified into two parts: 1) the change in real GDP growth and 2) the change in inflation.
Instead of the initially expected real production growth (GDP) of 4.5%, a growth of around 3% will be achieved – which directly affects the reduction of the nominal GDP by 1.5% compared to the plan.
However, instead of the expected average inflation of 3.7%, inflation of 11.6% will be realized – which then affects the nominal GDP increase by 7.9%. These two factors in total influenced the nominal GDP to increase in relation to the initial forecast by about 6.5%, i.e. for 444 billion dinars (3.8 billion euros).
The council warns that economic growth is slowing down if you look at the results of the first three quarters.
In the first quarter, the GDP growth was 4.3%, in the second 3.9%, and now the latest estimate by RZS is that it was 1.1% in the third, Nova Ekonomija reports.
