Serbia may be threatened by recession in 2012 if the drop in industrial production continues, economist Stojan Stamenkovic estimated on April 10.

Speaking at the presentation of the new issue of the monthly Makroekonomske Analize i Trendovi (MAT), he said that the biggest drop in industrial production since 2000 was registered in February this year.

The seasonally adjusted index of industrial production in February is 14.6 percent lower than last year's average, and 13 percent lower than in January 2012.

Stamenkovic also said that Serbia's currency reserves will be spent in two or three years if the rate at which they have gone down from the start of this year continues.

He said that, in the first two months, the currency reserves were reduced by $900 million and that, by the end of March, the National Bank of Serbia had spent around EUR500 million on the inter-bank currency market in order to maintain the dinar exchange rate.

Serbia's foreign currency reserves are around EUR10 billion, but this includes the required reserves of banks and the population's savings in foreign currency. Thus, with the central bank intervening like this, the reserves belonging to the state and the central bank will be spent in two or three years, he said.

According to Stankovic, if this happens Serbia will face an external lack of liquidity, which could cause a major fall in the dinar's value, and this will be a problem for the new government.