Bloomberg News

Serb Companies May Return to Loss on Weaker Economy, Dinar

June 12, 2012

Serbian companies may be loss-making this year if the economy continues to contract, inflation rises and the dinar further depreciates, the Belgrade-based Business Registers Agency said.

About 90,000 companies in Serbia’s private sector posted net income of 84.8 billion dinars ($912 million) in 2011, returning to profitability after three years of losses, said Ruzica Stamenkovic, the agency’s head of financial reports.

“The current trends don’t seem very favorable” and if indicators including “inflation, the dinar exchange rate, GDP and industrial production” do not improve in the second half of the year, then companies will return to a loss, Stamenkovic told a news conference in Belgrade today.

Annual inflation rose to 3.9 percent in May from 2.7 percent in April while the economy contracted 1.3 percent in the first quarter, following growth of 1.6 percent in 2011. The central bank expects the economy to grow 0.5 percent this year.

The dinar has depreciated 9.6 percent so far this year against the euro, according to the National Bank of Serbia calculations, following a cumulative 0.8 percent rise in 2011. The dinar’s relative stability last year allowed the private sector to avoid negative exchange rate effects, she said.

To contact the reporter on this story: Misha Savic in Belgrade at Msavic2@bloomberg.net Gordana Filipovic in Belgrade at gfilipovic@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net


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