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Serbia’s economic growth forecasted at 3.5 percent, inflation on decline

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The Vice Governor of the National Bank of Serbia (NBS), Željko Jović, projected that Serbia’s economic growth for the year would hover around 3.5 percent. Looking ahead, he anticipated that the country’s economic expansion in the coming years would likely fall within the range of four to five percent. Jović noted a downward trend in inflation over the past year, culminating in April of this year when it reached a level of five percent.

Addressing the “Risks of the New Age – A New Era of Sustainability” conference, organized by the Be Risk Protected platform, Jović highlighted that inflation is expected to approximate the target value by the year-end, with the primary factor contributing to its decline being the reduction in food prices.

Discussing the economy’s growth trajectory, he underscored that Serbia has been experiencing an investment cycle since 2015. Currently, investments constitute 23 percent of gross domestic product (GDP), with expectations for this figure to rise to 25 percent with the initiation of projects related to the international specialized exhibition EXPO 2027 in Belgrade. Notably, Jović emphasized that many investments involve upgrading existing facilities, yielding positive environmental outcomes.

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Regarding foreign direct investments (FDI), Jović revealed that from 2018 to 2023, they amounted to 23.1 billion euros, with a record-high of 4.5 billion euros registered last year. These investments primarily targeted tradable sectors, with a focus on ensuring production and export diversification. This strategic emphasis on export capacity led to a significant surge in exports, reaching 41 billion euros or nearly 60 percent of GDP, resulting in a modest balance of payments deficit of 2.6 percent.

Identifying key threats to the Serbian economy, Jović highlighted geopolitical tensions, climate change, the energy crisis, demographic trends, and cyber risks. He also cautioned against “greenwashing,” where companies attempt to mislead the public with reports on their purportedly green business practices.

Additionally, Jović noted the banking sector’s recognition of the importance of climate risk management to maintain stability and support the green transition. Many banks have incorporated goals to reduce their carbon footprint, with half of them offering green loans aimed at promoting energy efficiency.

The conference “Risks of the New Age – A New Era of Sustainability” brought together representatives from the business sector, public companies, institutions, and local governments to discuss global business risks, preventive measures, and insurance coverage options.

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