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| Serbia and Montenegro |
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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 Federal Republic of Yugoslavia (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 Deutsche Mark (now replaced by 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 Serbia and Montenegro (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.
Purchasing power parity - $25.3 billion (2002 est.)
Real growth rate: 3% (2002 est.)
Per capita: purchasing power parity - $2,370 (2002 est.)
Composition by sector:
Population below poverty line: 30%
Household income or consumption by percentage share:
Inflation rate (consumer prices): 19% (2002 est.)
Labor force: 3 million (2001 est.)
Labor force - by occupation: agriculture NA%, industry NA%, services NA%
Budget:
Industries:
Industrial production growth rate: 1.7% (2002 est.)
Production: 31,710 GWh (2001)
Production by source (2001):
Consumption: 32,370 GWh (2001)
Exports: 446 GWh (2001)
Imports: 3,330 GWh (2001)
Production: 15,000 barrel/day (2,400 m³/d) 2001
Consumption: 64,000 barrel/day (10,200 m³/d) 2001
Exports: NA (2001)
Imports: NA (2001)
Proved reserves: 38.75 million barrel (6,161,000 m³) January 2002
Proved reserves: 24.07 km³ (January 2002 est.)
Cereals, fruits, vegetables, tobacco, olives; cattle, sheep, goats.
Total: $2.3 billion f.o.b. (2002 est.)
Commodities: manufactured goods, food and live animals, raw materials
Partners: Italy 14.5%, Bosnia and Herzegovina 14.5%, Germany 10.7%, The Former Yugoslav Republic of Macedonia 9.1% (2002)
Total: $6.3 billion f.o.b. (2002 est.)
Commodities: machinery and transport equipment, fuels and lubricants, manufactured goods, chemicals, food and live animals, raw materials
Partners: Russia 12.5%, Germany 13.1%, Italy 10.3%, Hungary 4.4% (2002)
External: $9.2 billion (2001 est.)
Economic aid - recipient: $2 billion pledged in 2001 (disbursements to follow for several years)
New Yugoslav dinar (YUM). Note - in Montenegro the euro is legal tender; in Kosovo both the euro and the Yugoslav dinar are legal (2002)
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
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