The National Bank of Serbia expects that a large part of the decline in economic activity from the second quarter will be compensated during the third quarter and that a full economic recovery will follow by the end of the year or in the first quarter of next year at the latest.
“We expect that this year the gross domestic product of Serbia will really decrease by only 1.5 percent and that next year we will record a growth of about six percent,” the governor wrote, adding that if Serbia achieves this result, there is a great possibility that this will be the best result of all European countries.
Explaining the role of the central bank in previous years, she pointed out that the key role was to achieve and then preserve price and financial stability.
In support of that, she stated that inflation has been reduced from double-digit levels to a level comparable to European countries and has been maintained at around 2 percent over the past seven years.
Keeping inflation under control has reduced the costs of financing the economy, the state and the population.
According to Jorgovanka Tabakovic, low inflation and trust in the NBS enabled the easing of monetary policy, so the reference interest rate was reduced by 10.5 percentage points, from 11.75 percent in May 2013 to 1.25 percent, which is its lowest level in the inflation targeting regime.
“Significantly lower interest rates increased the disposable income of the economy and citizens and supported credit activity, which encouraged investments, economic activity and employment,” said Governor Jorgovanka Tabakovic.
She also pointed out that financial stability has been preserved, and the legacy of problem loans has been resolved in a systematic way.
Thus, at the end of July, their share was lowered to 3.6 percent, which is 18.6 percentage points lower than when the Strategy for resolving problem loans was adopted in 2015.
The governor also states that despite the global economic crisis and the uncertainty caused by the coronavirus, savings in Serbia continue to grow.
According to her, that indicates the continuation of the population’s trust in the stability and security of the domestic financial system.
By implementing reforms, in which, according to the governor, the NBS also made an important contribution with its monetary policy, Serbia has become attractive to investors.
The fact that in 2019 Serbia attracted about 60 percent of all foreign direct investments in the Western Balkans, ie more than all other countries combined, speaks of the fact that our country is attractive for investments.
“The net inflow of foreign direct investments last year was 3.6 billion euros, which is a record level that Serbia has ever attracted,” said the governor of the National Bank of Serbia, Jorgovanka Tabakovic, Nova reports.
