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2018/09/12 / Erste Group Research

RS Macro Outlook, Serbia: Strong acceleration of economic activity in 1H18

We have revised our GDP forecast upwards, from 3.5% y/y to 4% y/y, as the 1Q18 and 2Q18 GDP growth figures landed at an unexpectedly strong 4.9% y/y and 4.8% y/y, respectively. Growth was mostly supported by stable private consumption performance and the strong rebound of investments. Inflation is moving inside the NBS target band and gradually accelerating, while labor market indicators have continued to improve. As for economic policy, fiscal policy took on a more expansionary tone, while the NBS has kept the key rate at 3% since April and we expect to see the key rate at current level throughout the year

Looking ahead, we expect a continuation of positive economic trends for the rest of the year. We see domestic demand as the key growth factor, while net exports should maintain their negative contribution. Fiscal policy is expected to remain expansionary, as the budget execution leaves enough fiscal space. As for monetary policy, we expect to see the key rate remain unchanged for the rest of 2018, as we expect gradual acceleration of the inflation trajectory in the coming months. Strong GDP numbers, acceleration of lending activity and expected ECB tapering also play an important role for the monetary policy outlook.

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General information

AuthorErste Group Research
Product nameCEE Country Macro Outlook
Topic in focusFX, Macro/ Fixed income
Economy in focusSerbia
Currency in focusSerbian dinar
Sector in focus-


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