THE BALKAN REGION has so far seen little in the way of negative effects from the credit crunch. Growth has remained strong. In Croatia, for example, real GDP growth reached nearly 6%, according to the IMF. This growth was largely the result of surging domestic demand. As income expectations rose in the wake of economic growth, so too did financial activity among consumers. In Serbia, where GDP growth was 7.5% last year, the average net income in 2007 was 19.5% higher than in 2006, according to the National Bank of Serbia (NBS). With the expectations and promises following that country’s national elections in May of this year, employees’ income expectations have not fallen with the downturn in the global economy, especially considering that real net wages growth for the first six months of 2008 was up 4.3% compared with 2007.
The retail lending boom...
