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Serbia’s economic outlook for 2024: Growth, inflation, and investment projections

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During the presentation of the Quarterly Monitor of Economic Trends and Policies in Serbia at the Faculty of Economics in Belgrade, it was projected that in 2024, the economy would expand by three to 3.5 percent, while real wages are expected to rise by four to five percent. Additionally, moderate growth in external deficits and an average inflation rate of 4.5 to five percent were anticipated.

Milojko Arsić, the editor-in-chief of the Quarterly Monitor magazine, highlighted that Serbia’s economic activity is advancing at a faster pace compared to Central and Eastern European countries, despite facing higher inflation rates.

At the onset of 2024, the trend of declining inflation persisted, with February witnessing a year-on-year drop to 5.6 percent.

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“In February 2024, Serbia ranked second in Europe in terms of year-on-year price growth, trailing only Romania. While inflation is expected to decrease in the coming period, it is anticipated to remain above the National Bank’s target corridor of three percent,” Arsić noted.

Unless significant price surges occur in the global market, inflation is forecasted to decelerate in the upcoming months, potentially leading to a reduction in interest rates by the National Bank of Serbia by the end of the second quarter.

“The real value of loans to both the economy and the population experienced a notable decline during 2023, with loans to the population witnessing a nominal decrease by the end of the year,” Arsić stated.

Economists foresee stagnation or a slight decrease in nominal interest rates in the months ahead, accompanied by a further rise in real interest rates, which are expected to remain relatively elevated over the next one to two years.

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Arsić highlighted expectations of a decrease in foreign direct investments in Serbia in the coming years due to increased costs in euros, high interest rates, slow growth in European countries, and reduced opportunities for tax incentives.

Regarding public debt, Arsić noted that Serbia’s level is moderately high.

“In terms of the level of public debt, Serbia ranks around the average among the countries of Central and Eastern Europe,” Arsić concluded.

The Quarterly Monitor magazine is published by the Foundation for the Development of Economic Science within the Faculty of Economics.

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