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2022/12/01 / Erste Group Research
Serbia | Energy crisis ripples through the economy

Energy crisis ripples through the economy

Second-round effects of the war in Ukraine have started to spill over into economic growth. After solid economic growth in 1H22, the pace of expansion slowed considerably over the summer. Economic sluggishness is projected to persist throughout 1H23 reflecting a projected recession in the Eurozone, the impact of persistent inflation and the deterioration in consumer and business confidence.

The data for October revealed that inflation accelerated further, resulting in 15% growth in y/y terms. While earlier inflation was mostly driven by food and energy prices, core inflation accounted for roughly 60% of headline inflation in 3Q. We still expect inflation to peak in 4Q22, but it will remain high in historical terms for quite some time going forward.

Gross refinancing needs for next year are high at around 10% of the GDP, reflecting EUR 4.6bn in maturities and EUR 2.2bn to cover the budget gap. The government recently signed an agreement with the IMF for a 2-year SBA worth EUR 2.4bn, while the rest will likely also be covered through bilateral credit deals.

Serbian Eurobond yields retreated from highs seen in mid-October above 8%, closer to the 6% mark. Still, the economic and market backdrop remains challenging for EM, with global growth expected to slow and inflation expected to remain elevated over the coming months.

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General information

AuthorErste Group Research
Product typemonthly/ quarterly
Product nameCEE Country Macro Outlook
Topic in focusFX, Macro/ Fixed income
Market cap-
AvailabilityAll [1]


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