Slow economic recovery, high unemployment rate and revised GDP growth rate from three to two percent, are crucial characteristics of doing business in Serbia in 2011, President of the Serbian Chamber of Commerce (PKS) Milos Bugarin stated Wednesday.

At the session of the PKS Management Board, Bugarin said that industrial production is declining, which clearly indicates that Serbia's real sector has been hit by the second wave of crisis.

According to Bugarin, the drop in industrial production in August 2011 compared to August 2010 was mainly influenced by food processing due to the drop in domestic demand, and base metal production due to the decline of foreign demand.

He added that, according to the data of the National Employment Service, unemployment in Serbia in August 2011 reached 27.34 percent, whereas the employement rate reduced from 1.2 percent compared to the August 2010. Bugarin said that illiquidity, inflation and unpredictable exchange rate are great risks for the Serbian economy, and additional risk is posed by political instability which may occur due to the aggravation of the Kosovo crisis, as well as the possibility of not obtaining the EU candidate status.

Bugarin said that PKS made a proposal of priority measures related to the adoption of the strategy and plan for the public sector reform, completion of the tax system reform, as well as the adoption of a regulation limiting payments to 60 days until the end of 2011, and 45 days from the beginning of 2012.

It is necessary to cover liabilities to the economy and create conditions for investments, which include opening of a development bank, introduction of a regulation for private and public partnership and concessions, in order to encourage investments.

Bugarin stated that NBS should consider the possibility of reducing the required bank reserves, adjusting regulations on classification of claims, developing mechanism for protection against changes in interest rates, and designing mechanisms for exchange rate regulation, in order to avoid large oscillations and their influence on the competitiveness of economy.