Economists query rosy official Serbian data

BELGRADE, Jan 27, 2000 -- (Reuters) Serbian economists on Wednesday challenged official statistics showing inflation was tamed in December, saying their own survey showed that half of all companies raised their prices substantially.

Serbia said earlier this month December consumer prices fell 0.7 percent. But a survey by the Economics Institute among 300 companies showed 52 percent of them had hiked their prices by more than five percent in December, the economists said. Some 75 percent saw price pressures building in the first quarter.

"Some 72.5 percent of the companies polled said they expected prices to continue to rise. This points to high inflationary expectations," Goran Pitic, head of research with the Economics Institute, said.

The statistics also said industry grew 3.8 percent in December compared with November, with the highest growth reported by the power industry, although overall 1999 production was 24 percent below its 1998 level due to NATO's air strikes.

Nevertheless, Belgrade and towns across Serbia faced new power cuts on Wednesday after temperatures fell to 20 below zero this week and the grid, heavily damaged in the three-month bombing last year, could not meet the demand.

Energy industry officials say the energy crisis means only the food processing industry is working without interruptions.

The government promised a 14 percent hike in industrial output in 2000, seen by the economists as unrealistic.

They also said official reports of a rising number of employed due to ongoing reconstruction activities, did not appear to reflect reality.

While 6.6 percent of the firms polled said they had a larger number of workers, 13.3 percent reported a decline. The rest had an unchanged employment record, Pitic said. The businesses polled said they expected another year of overall instability, low exports and absence of foreign investments. Some 16 percent expected some improvement, 16.5 percent deterioration and the rest saw no changes.

Only ten percent of them expected foreign sources of funding in 2000, due to the numerous sanctions imposed by the West.

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