RTTNews - The decline in Serbia's economy seems to be moderating and the risks to the growth outlook are now more balanced, the International Monetary Fund or IMF said Tuesday.

The country's output is expected to stabilize in the second half of the year, consistent with the IMF's expectations of a 4% drop for this year. However, output is expected to recover with a growth of 1.5% next year. Inflation remains within the target range and the current account deficit also has been decreasing rapidly.

The lender pointed out that the current stand-by arrangement with the country generally performed well, with most of the performance criteria being implemented. At the same time, the lender said Serbia needed to address its sizable deficit of 5.5% of GDP, which was inconsistent with sustainable public finances.

The IMF mission said the country should continue to focus on monetary policy. While there may be scope for some monetary easing given the economic slowdown, it was agreed that it should proceed with caution given the still-high inflation, the lender added.

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