The rating agency Fitch Ratings kept Serbia’s credit rating at BB+, which is one level up to the investment one, the National Bank of Serbia announced.
The International Financial Institution has increased the projection of the growth of the gross domestic product (GDP) of Serbia from 5.2 to 6.3 percent in 2021, and in 2022 it expects the continuation of high growth of 4.4 percent.
The agency assessed that Serbia’s rating was supported by “a credible macroeconomic framework, relatively low inflation and higher foreign exchange reserves”, as well as that Serbia has a higher level of human resources and GDP per capita compared to countries with the same credit rating.
Fitch Ratings adds that Serbia’s credit rating and stable prospects for its further increase are supported by the shown resistance of the Serbian economy to the consequences of the pandemic, limited growth of public debt and confidence in the prospects of fiscal consolidation in Serbia.
“Just as we have been firmly behind our macroeconomic projections since the beginning of the pandemic, which proved to be the most accurate, so now we believe that it is quite realistic to achieve real GDP growth of at least 6.5 percent at the annual level, because the latest data show that a better outcome is possible. And not only that, the NBS has, for the first time, revised the medium-term projection of real growth of gross domestic product – from four, as it was before, to the range of four to five percent,” said NBS Governor Jorgovanka Tabakovic.
Fitch’s rating states that inflation in Serbia in the previous seven years averaged two percent, which is lower than the level of inflation in countries with similar credit ratings, and Tabakovic announces that it will remain within the inflation target of three ± 1.5 percent.
It is estimated that the banking sector remained stable during the pandemic, with preserved liquidity, dynamic lending activity and a further decline in the share of non-performing loans in total loans to 3.6 percent in June this year.
The report estimates that the public debt will not exceed the level of 60 percent of GDP this year, and that its share will gradually decrease in the next two years.
It is also added that the current account deficit in 2020 was reduced by 2.6 percentage points, and it is estimated that this year it will be further reduced, and that in the next two years it will average 3.7 percent.
The expectation that the current account deficit will continue to be fully covered by the net inflow of foreign direct investment, as was the case in the previous six years, is also cited as important, N1 reports.
