Serbia Economic and FDI Outlook
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Sustained Macroeconomic Stability
Despite the multidimensional crisis that lasts more than 3 years, Serbia has managed to preserve the stability of its economy
and the consumers and investors' confidence, as evidenced by cumulative real GDP growth in the period 2020-2023 of
around 12%, record inflows of FDI, continued growth of employment and wages in the private sector, as well as a record
level of FX reserves.
Inflation has been on a declining path since April 2023, while in March it slowed further to 5.0% y/y. Inflation will downward
path through 2024, while the return to the target tolerance band is expected most likely in May 2024 and approaching to
central point of target is expected by the end of 2024.
Projected GDP growth for 2024 is in the range of 3-4%, and in 2025 and 2026 we expect an additional acceleration to the
range of 4-5%, in line with the new investment cycle associated with the project EXPO 2027.
In 2023 the CAD amounting to EUR 1.8 bn (2.6% of GDP), which represents a record low value of the share of the CAD in
GDP. For 2024, we project the CAD of EUR 3.0 bn (4.0% of GDP), due to expected acceleration of investment cycle.
Due to product and geographic diversification and export-oriented investments, Serbia's exports showed resilience in 2023
despite the decrease in demand from the EU and the region, upon which it relies heavily and managed to achieve a growth
of approximately 8% y/y in goods and services exports. Export growth continued in two months of 2024, supported by strong
exports of the manufacturing (+11.0% y/y) and the recovery of exports of agricultural products.
During Jan-Feb 2024, the net inflow of FDI amounted to EUR 854 mn and was doubled compared to the same period of the
previous year.
According to LFS, the unemployment rate in Q4 2023 was 9.1%, which is 0.3 pp lower than in Q4 2022. This rate for the
whole year 2023 is 9.5% on average and is around last year's level. Formal employment stood at 0.5% in the period
January-February 2024.
Fiscal developments in 2023 were also better than expected, with a realized deficit of the consolidated budget of RSD 181.1
bn (2.2% of GDP). At the end of February 2024, general government public debt stood at the level of 48.2% of GDP.
The Standard & Poor's agency has increased Serbia's outlook for obtaining an investment grade credit rating from stable to
positive.
In April 2024, the key policy rate was kept unchanged at 6.5% for the ninth consecutive month, motivated by the declining,
though still elevated global inflationary pressures, the current medium-term inflation projection, and global uncertainty over
energy and primary commodity prices.
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Banking sector stability has been preserved - the share of NPLs in February was at 3.2%.View entire presentation