Excerpts from the speech of Mike Harvey, Director of USAID Mission in Serbia and Montenegro, at the presentation of Quarterly Monitor no. 19
We all know too well how the events of the past eighteen months have left few economies around the world untouched by what many are now calling the “Great Recession”. During this period, outlooks have changed from optimism and exuberance, spurred by the spectacular economic growth of the past two decades, to gloom and pessimism. And, we have seen the world move from one macroeconomic crisis to another.
Compared to other regions of the world, central and eastern Europe has been hit the hardest by the crisis. One prominent lesson from the crisis, which is the first major recession of the globalized era, is the realization that an increasingly integrated global economy has severely challenged the ability of individual nations to implement domestic policies that can influence or contain adverse global macroeconomic trends. The ongoing economic and financial market turmoil has also demonstrated that the poorest citizens who rely upon Government social programs are extremely vulnerable to such market turbulences. During this turbulent period, Governments must balance their macroeconomic policies between economic rebound and sustained recovery - which are two very different policy objectives.
While Serbia has fared better than some countries in central and Eastern Europe, it too has been deeply impacted by the crisis. The Government of Serbia is required to make difficult and unpopular policy decisions to implement the necessary fiscal adjustments that will secure macroeconomic stability and return the economy to desired levels of growth. We need not look further than the Balkans (e.g. Greece) to see the fallout that can occur when markets lose confidence in a Government’s capacity to articulate and implement a credible fiscal plan. The loss of market confidence has a variety of adverse effects on a country’s prospects for foreign investment, risk premiums to finance deficits, and a local currency’s value. These are all reasons why sound economic policies are crucial for macroeconomic stability and growth.
Evidence-based research is critically important as the Government pursues its tasks of maintaining macroeconomic stability and implementing a variety of fiscal and structural reforms that will facilitate economic growth and prepare the country for EU integration. We all understand that Serbia will not be able to return to its pre-crisis model for economic growth. The country’s post-crisis strategy for economic growth and competitiveness will not only need to be redefined, but it needs to be implemented. It is the Serbian Government’s need for quality research that led USAID to support FREN and the Quarterly Monitor. Our support is rooted in the United States Government’s belief that policy decisions in a democratic society need to benefit from evidence-based research. Independent think tanks like FREN produce such research, and the Quarterly Monitor is a vehicle for reaching stakeholders within and outside the Government of Serbia with that research, and to provide interested parties and stakeholders with a reliable source of economic data which can be used in shaping and discussing public policy.
When USAID began supporting the Quarterly Monitor in 2006, we had several goals. Among these goals were: (1) a desire to strengthen the capacity for independent economic research outside the Government and its institutions; (2) a desire to ensure a repository for economic and statistical data and analysis that conforms to international standards; and (3) the desire to strengthen the human capacity and infrastructure of a reputable think tank that sustains independent and respected economic research beyond USAID’s presence in Serbia. Today, USAID, other donors and international financial institutions agree that the Quarterly Monitor provides valuable independent and objective research and analysis focused on the Serbian economy. In fact, frequently the issues researched through the Quarterly Monitor help to shape and focus the technical assistance provided to Serbia and its institutions by the donor community and by international financial institutions.
Through sound economic policies, Serbia can achieve macroeconomic and financial stability which can enable sustainable economic growth. This, in turn, attracts foreign investments and provides citizens with better jobs and a more secure economic future.