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Serbia’s economic outlook: Growth amidst sectoral challenges and inflation dynamics

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The latest edition of Macroeconomic Analysis and Trends (MAT) reports that Serbia’s real GDP experienced a growth of approximately 4.6 percent in the first three months of 2024. However, this growth was primarily driven by the energy sector, as all other production sectors recorded year-on-year increases in added value during this period.

In March 2024, industrial production witnessed a decline of 5.8 percent compared to the same month the previous year, contributing to an overall year-on-year increase of 2.9 percent for the period of January to March. The authors of the analysis attribute this decline mainly to a significant reduction in manufacturing sector production, which decreased by 6.6 percent, contributing 4.9 percentage points to the overall decrease in industrial production.

The value of foreign trade exchange, which had increased in February, saw a reversal in March. The commodity exchange value decreased by 9.1 percent compared to March 2023. Merchandise exports amounted to 2,486 million euros (a decrease of 10.6 percent), merchandise imports to 3,199 million euros (a decrease of 7.9 percent), and the trade deficit widened to 713 million euros (an increase of 3.2 percent).

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The current account deficit for January-February 2024 totaled 50.3 million euros, in contrast to the surplus of 109.6 million euros recorded during the same period the previous year. This deficit is attributed to a decrease in the state’s net income, a lower surplus in international trade services, increased net outflow of interest from other investments, and a higher net outflow of income from direct investments.

Despite these economic indicators, Serbia’s real GDP growth in the first quarter of 2024 aligns with the projected annual growth rate of approximately three percent.

On the inflation front, both monthly and year-on-year inflation rates decreased in March. Monthly inflation rates stood at 0.6 and 0.3 percent in February and March 2024, respectively, with year-on-year inflation at 5.6 and 5 percent. While year-on-year inflation continued to decline in March 2024, the National Bank of Serbia anticipates it returning to the target range (3 percent ±1.5 percentage points) by May 2024.

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