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Republic of Serbia’s balance of payments

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During January-October 2023, the current account deficit of the Republic of Serbia amounted to 1,010.6 million euros, marking a notable decrease of 2,488.3 million euros or 71.1% compared to the same period in the previous year, when the deficit stood at 3,498.9 million euros. This reduction in the deficit was primarily driven by a smaller deficit in the overall foreign trade turnover, which decreased by 3,555.8 million euros or 56.7%.

Trade in Goods and Services

The deficit in foreign trade in goods decreased by 2,863.4 million euros or 35.8% compared to January-October 2022, reaching 5,134.8 million euros. This improvement was mainly attributed to increased exports of machinery and electrical energy, coupled with a significant decline in imports of energy resources.

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Primary Income Account

The deficit in the primary income account, covering income from employment compensation, investment income, and income from foreign reserves, increased to 3,064.0 million euros, up by 960.0 million euros or 45.6%. This rise in the deficit was primarily due to a higher net outflow of income from direct investments, particularly dividends, reinvested earnings, and interest payments.

Secondary Income Account

The surplus in the secondary income account decreased slightly to 4,770.8 million euros, down by 107.5 million euros or 2.2%. This surplus was mainly driven by inflows from private sector remittances, pensions from abroad, and other current transfers.

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Financial Account

There was a net inflow from financial transactions amounting to 594.0 million euros, significantly lower by 3,358.0 million euros or 85.0% compared to January-October 2022. This inflow primarily stemmed from foreign direct investments, government borrowing through eurobond issuances, and net borrowings by the government and enterprises through financial loans.

Foreign Direct Investments

The net inflow of foreign direct investments increased by 247.8 million euros or 7.7% to 3,477.2 million euros, with the majority attributed to equity investments, including reinvested earnings.

Portfolio Investments

The net inflow from portfolio investments surged to 1,017.5 million euros, mainly due to government borrowing through eurobond issuances.

Other Investments

The net inflow from other investments slightly decreased to 598.5 million euros, covering cash and deposits, financial loans, and trade credits.

Foreign Exchange Reserves

Foreign exchange reserves increased by 4,582.5 million euros, primarily driven by interventions by the National Bank of Serbia in the domestic foreign exchange market and inflows from the sale of government securities.

Key Changes in October 2023

In October 2023, the current account deficit increased by 34.9 million euros or 17.3% compared to the same month in the previous year. This was mainly due to a decrease in net remittances from workers abroad and a higher net outflow of income from direct investments. The trade deficit in October decreased by 25.7%.

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