* Serbia, Croatia Q1 trade falls, trade gaps shrink
* Poor indicators could prompt heavy rate cut in Serbia
By Aleksandar Vasovic and Zoran Radosavljevic
BELGRADE/ZAGREB, April 30 (Reuters) - Serbia and Croatia on Thursday reported a rapid decline in foreign trade in the first quarter of 2009, although some evidence of a pick-up in March may signal a floor has been reached.
Serbia's exports fell by 33.5 percent and imports by 35.2 percent from January to March, cutting the trade deficit by more than a third to $1.83 billion as the global financial and economic crises cut demand for exports and funding for imports.
However, in March Serbian exports rose to $659 million from $525 million in February, while imports surged to $1,377 million from $1,123 million, the data showed.
In Croatia, exports fell by 13.3 percent and imports by 23.7 percent in the first quarter, taking the trade gap down to 1.8 billion euros ($2.40 billion) from 2.67 billion. Exports fell in March compared with February, but imports grew.
Serbia's focus on southeast Europe seemed to have halted decline in its exports, analysts said, adding Croatia was also increasing sales to the region, as well as Africa and Asia.
Even so, Serbian analysts say the outlook remains gloomy and could prompt the central bank into more drastic cuts in interest rates from the current 14 percent. "Both short- and medium-term, the outlook is recession," said Dusko Vasiljevic, a researcher with the Belgrade-based think tank CEVES. "I would not be surprised with a 200-250 basis point (rate) cut."
Ante Babic, vice-president of the Croatian Exporters Association, said export orders had fallen on average 20 percent since mid-2008. "I think we have reached the trough and should stay there through the second quarter, until Europe starts recovering," he said, adding he did not see exports picking up until the second half of 2010.
Vladimir Ferdelji, general manager of Elektrokontakt, Croatia's electrical components manufacturer which controls a third of the global market for electricity regulators, said the fall in demand from the United States contributed to a 12 percent drop in output last year.
"This year we planned a further production decrease of 20 percent, but so far orders are showing we are even below that plan by some 20 percent," Ferdelji said.
In Serbia, industrial batteries producer Krusik Akumulatori, which went private two years ago, saw an even deeper decline. Its main customers are railways and heavy industries.
"Our exports fell by an annual 30 percent since the beginning of 2009," said general manager Zoran Perucic. (Additional reporting and writing by Gordana Filipovic; Editing by Adam Tanner/Ruth Pitchford)