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2024/06/13 / Erste Group Research

Growth prospects look strong

Strong start of the year (0.8% q/q s-a; 4.7% y/y) has strengthened expectations growth will return closer to potential level. The economy demonstrated a continuation of strong domestic performance, with private consumption accelerating by 4.4% y/y, the highest pace in two years, confirming improving real wage dynamics. Our FY24 and FY25 GDP forecast has been upgraded to 3.8% y/y and 4% y/y, respectively, after the flash release. Overall, the risks to our forecasts seem balanced.

Inflation continued to decrease early in 2024, with the headline figure finally returning to the target band in May (4.5% y/y). The decline in prices was underpinned by smaller growth in food and energy prices as global cost push pressures eased.

After ECB delivered the widely expected 25bps cut in June, the NBS followed suit and cut its key rate by 25bps, setting the key rate to 6.25%. Going forward we expect the NBS to cut by an additional 100bps by year-end, which would set the key rate to 5.25%.

Refinancing on the local market YTD was smooth with the MoF basically just rolling over maturities, mostly in the 1Q. Focus in the 2Q was on the Eurobond launch. In June Serbia successfully issued 10Y USD green bond, taping USD 1.5bn.

Repeated local elections, including city of Belgrade, were held on June 2nd and the incumbent parties have kept dominance.

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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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