Public Sector Wages in Serbia

Macroeconomic aspect. The basic characteristics of macroeconomic trends in Serbia in the first half of the year is a significant growth of aggregate demand relative to domestic supply. The basic risks that may occur as a result of these macroeconomic trends are the growth of inflation and the aggrevation of trade deficit, i.e. current account deficit. In 2006 and the first half of 2007, inflation was under control, especially the core inflation which is primarily influenced by the growth of aggregate demand. Owing to the implementation of restricted monetary policy inflation was under control, and the surplus of demand overflowed to external sector, significantly contributing to the import and aggrevating trade deficit slowly exceeding the sustainability limit and threatening macroeconomic stability of the country.

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Bulletin Public Finances, July 2007