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Economy of Serbia and Montenegro

The economy of Serbia and Montenegro entered a prolonged decline in 1998. Exacerbated by international sanctions imposed in response to President Slobodan Milosevic's actions in Kosovo, the F.R.Y. economy's downward spiral showed no real sign of recovery until 2001. A vigorous team of economic reforms has worked to tame inflation (non-energy inflation is less than 9% in 2002, down from over 45% 3 years earlier) and rationalize the SaM economy. GDP, although only half of its 1997 level, is projected to increase steadily in the near future.

The F.R.Y.'s monetary unit, the dinar, remained volatile throughout the Milosevic regime. Alarmed F.R.Y. officials took several steps to tighten monetary policy in 1998, including ruling out a devaluation in the near term, increasing reserve requirements, and issuing bonds. During this period, Montenegro rejected the dinar and adopted the German mark (now the Euro) as its official currency. As 1999 began, the damage control operation had succeeded in returning the exchange rate to reasonable levels. However, it was not until 2002, after intense macroeconomic reform measures, that the dinar became convertible--a first since the Bretton Woods agreements laid out the post-World War II international exchange rate regime.

Privatization efforts have not succeeded as well as macroeconomic reform. The process of privatization is not popular among workers of large socially owned companies, and many citizens appear to believe the tendering process is overly centralized and controlled from Belgrade. Furthermore, international investment is still lagging in the SaM, as a result of both domestic and international investment climates. Managers tend to blame the dearth of interest on the current negative business climate in SaM. The Kragujevac-based automobile plant--heavily damaged during the recent NATO bombing--remains the most publicly discussed large privatization candidate, but efforts to sell the plant for as little as $1 have failed.

GDP: purchasing power parity - $25.3 billion (2002 est.)

GDP - real growth rate: 3% (2002 est.)

GDP - per capita: purchasing power parity - $2,370 (2002 est.)

GDP - composition by sector:
agriculture: 26%
industry: 36%
services: 38% (2001 est.)

Population below poverty line: 30%

Household income or consumption by percentage share:
lowest 10%: NA%
highest 10%: NA%

Inflation rate (consumer prices): 19% (2002 est.)

Labor force: 3 million (2001 est.)

Labor force - by occupation: agriculture NA%, industry NA%, services NA%

Unemployment rate: 32% (2002 est.)

revenues: $3.9 billion
expenditures: $4.3 billion, including capital expenditures of $NA (2001 est.)A

Industries: machine building (aircraft, trucks, and automobiles; tanks and weapons; electrical equipment; agricultural machinery); metallurgy (steel, aluminum, copper, lead, zinc, chromium, antimony, bismuth, cadmium); mining (coal, bauxite, nonferrous ore, iron ore, limestone); consumer goods (textiles, footwear, foodstuffs, appliances); electronics, petroleum products, chemicals, and pharmaceuticals

Industrial production growth rate: 1.7% (2002 est.)

Electricity - production: 31.71 billion kWh (2001)

Electricity - production by source:
fossil fuel: 62.9%
hydro: 37.1%
other: 0% (2001)
nuclear: 0%

Electricity - consumption: 32.37 billion kWh (2001)

Electricity - exports: 446 million kWh (2001)

Electricity - imports: 3.33 billion kWh (2001)

Oil - production: 15,000 bbl/day (2001 est.)

Oil - consumption: 64,000 bbl/day (2001 est.)

Oil - exports: NA (2001)

Oil - imports: NA (2001)

Oil - proved reserves: 38.75 million bbl (January 2002 est.)

Natural gas - proved reserves: 24.07 billion cu m (January 2002 est.)

Agriculture - products: cereals, fruits, vegetables, tobacco, olives; cattle, sheep, goats

Exports: $2.3 billion f.o.b. (2002 est.)

Exports - commodities: manufactured goods, food and live animals, raw materials

Exports - partners: Italy 14.5%, Bosnia and Herzegovina 14.5%, Germany 10.7%, The Former Yugoslav Republic of Macedonia 9.1% (2002)

Imports: $6.3 billion f.o.b. (2002 est.)

Imports - commodities: machinery and transport equipment, fuels and lubricants, manufactured goods, chemicals, food and live animals, raw materials

Imports - partners: Russia 12.5%, Germany 13.1%, Italy 10.3%, Hungary 4.4% (2002)

Debt - external: $9.2 billion (2001 est.)

Economic aid - recipient: $2 billion pledged in 2001 (disbursements to follow for several years)

Currency: new Yugoslav dinar (YUM); note - in Montenegro the euro is legal tender; in Kosovo both the euro and the Yugoslav dinar are legal (2002)

Currency Code: YUM

Exchange rates: new Yugoslav dinars per US dollar - official rate: 65 (2002), 10.0 (December 1998); black market rate: 14.5 (December 1998)

Fiscal year: calendar year

See also : Serbia and Montenegro