bojan markovic : why foreign analysts and investors view serbian macro prospects so differently from domestic public speech by mr bojan markovic, vice governor of the national bank of serbia, at the icap ’ s 1st credit risk management conference, organised by icap serbia, belgrade, 30 november 2011. * * * i should like to thank mirko djukic for comments and suggestions. ladies and gentlemen, recent turbulences in world financial markets have led to a rise in risk premia in many countries. in case of serbia, these pressures were moderate relative to regional peers, but one cannot be too cautious and should be prepared to act swiftly in order to minimize negative impacts of current turbulences. improving or maintaining serbia ’ s sovereign credit rating in these turbulent times is a challenge of a great importance. this is because it ensures sustainable sources of financing at a lower cost, not only for the government, but also for all other market participants – businesses, households, and banks, alike. the government and the central bank can best contribute to improving credit rating by pursuing policies that ensure long - term macroeconomic stability, such as : maintaining public debt at sustainable level, ensuring price stability in the medium term, and providing stable and resilient financial system. any attempt to „ stimulate ” the economy in an unsustainable way would jeopardize these goals, leading to a rise in the country ’ s risk premium and eventually hurting the very economy it was meant to help. over the past years foreign market participants and credit rating agencies recognized an improvement in serbia ’ s macro prospects. serbian press, however, has been even more deeply than usual flooded with doom - and - gloom commentaries of serbian economic performance during the crisis and especially its macro prospects for the future : “ we are facing inconsistency and incoherency of domestic economic policy daily observed by investors ” ( djordje djukic, biznis i finansije, june 2011 ), “ knocking on the imf doors is a proof of a complete defeat of the domestic economic policy ” ( zarko ristic, pravda, september 2011 ), “ domestic economy is currently in a position of titanic – sending sos signals ” ( sasađogovic, nacionalni građanski, september 2009 ), “ economic collapse looms large ” ( branislav grujic, novosti, august 2011 ). but at the same time, serbia saw its credit rating upgraded

fixed investment intended to promote labor saving and expand production capacity. according to the bank's march 2018 tankan ( short - term economic survey of enterprises in japan ), the diffusion index for business conditions for all industries and enterprises improved for the seventh consecutive quarter, reaching the highest level since 1991. 1 business fixed investment plans for all industries and enterprises, including financial institutions, showed a relatively strong year - on - year increase of 4. 3 percent for fiscal 2017 and 2. 0 percent for fiscal 2018. let us turn to the household sector. labor market conditions have tightened steadily as the number of employees has increased. the active job openings - to - applicants ratio has surpassed the peak level observed during the bubble period. the unemployment rate is 2. 5 percent, a level that essentially represents a situation close to full employment. firms are making active efforts to secure their labor force while expanding the scope of workers who may be employed and are promoting a shift from non - regular to regular employment. wages of part - time employees, which are responsive to labor market conditions, have risen markedly. although wages of regular employees - - the majority of employees - - have continued to increase only moderately, there are signs of gradual yet stronger improvement in wages. for example, the growth in base pay in fiscal 2018 is projected to exceed the actual growth of a year earlier, as in the previous year, and the share of firms raising wages the diffusion index for business conditions is calculated as the proportion of firms responding that business conditions were " favorable " minus the proportion of those responding that they were " unfavorable. " of regular employees is growing. with the employment and income situation improving, as i have mentioned, private consumption also has been increasing moderately. c. outlook for japan's economy as for the outlook, japan's economy is likely to continue its moderate expansion, supported by the highly accommodative financial conditions and stimulative fiscal measures. in line with the firm growth in overseas economies, exports are likely to maintain their increasing trend. as a virtuous cycle operating from income to spending is being maintained in both the corporate and household sectors, business fixed investment and private consumption are also likely to follow an uptrend. i believe that the impact of the consumption tax hike scheduled for 2019 is highly uncertain, yet most likely to be smaller than the impact of the tax hike in 2014. at the time of the previous consumption tax hike, the last - minute rise in demand before the