Economy Overview Economy Overview

Economy Overview

Economy Overview

On November 7th , the Executive Board of the International Monetary Fund (IMF) mission, led by James Roaf, completed the eight review of Serbia’s economic performance under the Stand-By Arrangement (SBA) signed in February 2015 worth Euro 1.2 billion. According to IMF statement, IMF and Serbian government have agreed key parameters of the 2018 state budget that will include increase in public sector salaries and state pensions. The IMF noted that Serbia continued its fiscal tightening and driven by strong revenues, this years government balance sheet is projected to be around zero, compared to the original budget deficit target of 1.7 % of GDP. The public debt-to-GDP ratio fell to 65.4 % at end-September, a drop of more than 10 % when compared to the 2015 peak. Serbia GDP growth in 2017 would amount to 1.9% while inflation rate is expected to reach 3%.

On Monday 11th December 2017, Serbia opened two new chapters in its EU accession talks . At the 7th inter-government conference in Brussels, Chapter 6 (Right of Establishment Buisness Entities) and Chapter 30 (External Economic Relations) were opened which brings the total to 12 negotiating chapters opened so far. Serbian officials had expected opening of Chapter 33 (financial and budgetary provisions) as well, but was put on hold due to objections from five EU member states (Germany, France, Sweden, Great Britain and Croatia) regarding the course of reforms, particularly in the area of the rule of law, fighting corruption and the restructuring of the judiciary in Serbia.

In December 2017, Global credit ratings agency S&P improved Serbia’s credit rating to BB level, with stable chances for improvement. S&P assessed that GDP would continue to increase in the period between 2018 and 2020 and that the growth would primarily be based on inflow of foreign direct investments and higher private consumption, which would be stimulated by the growth of employment, salaries and stable income of business entities.

Global credit ratings agency Fitch also improved Serbia’s credit rating to BB with stable chances for improvement from an earlier estimate of BB-. Better marks for Serbia are a reflection of improved public finances, supported by better fiscal result and increased FDI.

Serbia has improved its position by four places and is now ranked 43rd n the latest World Bank Doing Business 2018 list. World Bank Manager in Serbia Stephen Ndegwa stated that Serbia has improved regulations relating to doing business in absolute terms, and that the gap that separates it from countries with best business environment is narrowing. Serbia introduced significant changes in 2016/17 into the local regulatory network in areas such as company incorporation, reliability of cadastre system, introduction of geographical information system, and facilitation of application of contracts by adopting a new law on enforcement which widens and specifies the responsibility of bailiffs and the competence of courts in enforcement procedures. Serbia has been ranked 10th in this year’s report when it comes to procurement of construction license. Prime Minister Ms Ana Brnabic stated that Serbia’s progress in WB Doing Business List is a good signal for all investors across the world. She also announced further reforms in areas that were not assessed highly, so that Serbia could find itself among the first 30 out of 190 countries by the next year. PM Brnabic assessed that Serbia has to improve the areas of tax payments, bankruptcy cases solving, cadaster reform and the connection to the electricity network. Serbia achieved the best result on in the field of issuing building permits where it made the biggest progress from the 36th to the 10th place.

Key Economic Indicators of Serbia:

GDP in Serbia : USD 40.5 billion (Year 2017)

GDP in Serbia : USD 37.9 billion (Year 2016)

GDP per capita : USD 5,753 (Year 2017)

GDP per capita : USD 5,383 (Year 2016)

External Trade : USD 38.9 billion (Jan-Dec 2017)

Exports : USD 17.0 billion (Jan-Dec 2017)

Imports : USD 21.9 billion (Jan-Dec 2017)

GDP Growth rate : 1.9 % (Year 2017)

Exp. GDP growth : 3.5 % (Year 2018)

Inflation rate : 3.0 % (Year 2017)

Forex Reserves : USD 13.3 billion