The Serbian economy quickly reached pre-crisis levels

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The National Bank of Serbia (NBS) announced today that Serbia will achieve one of the best results in Europe in terms of economic growth, which will amount to more than six percent cumulatively in two pandemic years.
A statement from the NBS noted that the pre-crisis new economic activity was achieved in record time.
As it was stated, it took three quarters to return to the pre-crisis level, while after the crisis from 2008, the pre-crisis level was reached only after four and a half years.
“Our economy recovered in a relatively short period of time and reached the level before the pandemic in the first quarter of 2021. Thanks to the country’s favorable macroeconomic perspective, high inflow of foreign direct investment and the effects of previous investments, estimates for Serbia’s growth in 2021. We have been constantly revising upwards, as have the relevant international institutions,” said NBS Governor Jorgovanka Tabakovic.
As it was emphasized, “despite numerous challenges caused by the pandemic, the NBS did not allow macroeconomic stability to be called into question at any time.”
When summarizing the results achieved by the NBS this year, it was stated that the exchange rate of the dinar against the euro is stable, and that foreign exchange reserves are significantly higher than before the crisis.
“At the end of November, they amount to 16.5 billion euros, which is about three billion euros more than at the end of 2020, despite the pandemic,” the NBS specified.
As it was pointed out, the gold reserves additionally increased, by 1.7 tons, to a record 37.2 tons.
Also, dinar savings increased by 12 percent, to a new record level of about 811.3 reports, which is six times more than at the end of 2012, and the share of dinar savings in total savings has also increased.
The use of dinars in the financial system of Serbia has additionally increased, while the share of problem loans in total loans has been lowered to the lowest 3.4 percent.
The NBS also stated that the inflow of foreign direct investments amounted to around 3.6 billion euros, so that after the inflow of those funds, Serbia approached the record 2019.
It is also reminded that Serbia is “half a step closer to the investment rating, which increases the value of each individual company in the country”.
The increase in inflation in 2021 was based on temporary factors, primarily strong growth in world energy and food prices, as well as cost pressures due to stagnation in global supply chains.
“After the cessation of factors from the international environment that led inflation in 2021, ie with the stabilization of world energy and food prices, the gradual solution of the problem of stagnation in global supply chains and the arrival of the new agricultural season, we expect inflation to slow down from the second quarter of 2022 and to return to the goal limits in the middle of the year,” Tabaković pointed out.
As stated, low and stable core inflation, which is around the central value of the target of three percent, speaks in favor of that, “which indicates that there are no significant inflationary pressures from the demand side.”
It is estimated that the increasing use of dinars in the financial system also contributes to greater financial stability – dinarization, which in 2021 recorded record high levels or was close to them.
The central bank believes that the most significant progress in 2021 was achieved in the dinarization of placements to the economy and the population, which is close to 39 percent.
It was also assessed that the positive perception of Serbia as an investment destination speaks of the improvement of the prospects for increasing the credit rating by the rating agency Standard & Poor’s (Standard & Poor’s), which put the country “half a step” from obtaining an investment rating.
Among the important factors for making such a decision, the NBS mentioned a credible monetary policy framework and preserved financial stability.
“When we look at the many uncertainties and challenges from the international environment we faced during the second pandemic year, which required our constant vigilance, caution, but also proactivity, as well as what we have achieved and preserved in such circumstances, we can be more than satisfied,” said Tabaković, N1 reports.

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