Economy Overview

Economy Overview

According to the latest Government data Serbian GDP growth in Q4 of 2016 amounted to 2.5% while GDP growth for the entire 2016 amounted to 2.8%. The larger than expected GDP growth and revival of Serbia’s economy was based on higher consumer spending and increase of Serbian exports. The European Commission (EC) estimated that Serbia’s GDP growth in 2017 will reach 3% while GDP growth for 2018 is pegged at 3.3%. The EC further expects that Serbia’s strict fiscal policy will lead to the decline of public debt which amounted to 73.7% of GDP in 2016. It is expected to drop to 69.8% by the end of 2018.

Executive Directors of International Monetary Fund (IMF) have on 16 December confirmed a positive assessment of the sixth review of precautionary arrangement signed with Serbia in February 2015 worth Euro 1.2 billion, with the assessment that Serbia is noticeably improving its business environment, the economy is continuing to grow, supported by Government efforts to improve public finances, remove structure weaknesses and strengthen the country’s financial sector. Employment in Serbia is increasing, inflation is under control and public debt is starting to drop. The IMF has underlined the reforms of the public administration, better control and management of public spending and the judiciary reform would further boost investor confidence. With completion of the sixth review of the arrangement, Serbia now has Euro 850 million at its disposal for the purpose of currency and market stabilization.

On 13th December 2016 at an intergovernmental accession conference in Brussels, Serbia has opened two more negotiation chapters in the European Union (EU) accession process. Chapters 5 (public procurement) and 25 (science and research) are the latest to be opened for negotiations which brings the total to 6 chapters opened so far. At the third EU-Serbia Intergovernmental Conference held in Brussels on 18 July 2016, the Republic of Serbia opened negotiating Chapters 23 (judiciary and fundamental rights) and 24 (justice, freedom and security). The first intergovernmental conference which marked the beginning of formalized negotiations between Serbia and the EU was held on January 21, 2014; on the second one that took place on December 14, 2015, the first two chapters: 32 - on the financial control and 35 - on the normalization of relations with Kosovo – were opened.

Credit rating agency Standard and Poor’s (S&P) improved Serbia’s credit for long-term loans in domestic and foreign currency from “stable” to “positive” and confirmed Serbia’s credit rating at BB level. S&P also confirmed Serbia’s credit rating for short-term loans at B level. In a statement S&P explained that the credit assessment of Serbia was improved mainly due to the successful fiscal consolidation and implementation of structural reforms, faster economic growth based on investments and lower external unbalance due to growth of export.

Credit rating agency Fitch kept its current credit rating for Serbia at BB- level with stable chances for improvement. Confirmation of the current credit rating by Fitch is a based on an assessment that the Serbian Government would continue implementation of the fiscal consolidation program and structural reforms, move forward in EU accession negotiations and continue to implement the program regarding the precautionary arrangement signed with the International Monetary Fund (IMF).

In March 2016, the Moody’s agency changed Serbia’s credit outlook from stable to positive, while the countries’ credit rating remains at the B1 level. Serbia’s outlook has improved primarily due to the Government’s arrangement with the International Monetary Fund (IMF) and its determination to stop further growth of public debt through implementation of a fiscal consolidation program and structural reforms. Moody’s expects Serbia’s credit rating to improve in the near future when the first results public sector reforms become visible.

In the World Bank Doing Business report published in November 2016, Serbia was ranked 47th out of 189 countries. This is Serbia’s best overall ranking ever in terms of doing business. Serbia also ranked among year’s 10 most-improved countries.

Serbian government declared 2016 as the "Year of Entrepreneurship" and introduced a new program for support of start-ups and entrepreneurs. Around USD 150 million of funds were made available for encouraging entrepreneurs out of which 30% was specifically directed towards women entrepreneurship. Apart from financial support, interested entrepreneurs will receive assistance with preparation of necessary documents, business plans and will undergo training if necessary. The Serbian Chamber of Commerce & Industry as well as the Serbian Development Fund will play an important role in implementation of the new government program.

Key Economic Indicators of Serbia:

GDP in Serbia : USD 37.9 billion (Year 2016)

GDP in Serbia : USD 36.8 billion (Year 2015)

GDP per capita : USD 5,353 (Year 2016)

GDP per capita : USD 5,198 (Year 2015)

External Trade : USD 34.2 billion (Jan-Dec 2016)

Exports : USD 14.9 billion (Jan-Dec 2016)

Imports : USD 19.3 billion (Jan-Dec 2016)

GDP Growth rate : 2.8 % (Year 2016)

Exp. GDP growth : 3.0 % (Year 2017)

Inflation rate : 1.6 % (Year 2016)

Forex Reserves : USD 12.9 billion

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