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2024/03/12 / Erste Group Research

Growth tailwinds on the horizon

The Serbian economy outperformed expectations in 2023, as growth accelerated in 2H23, resulting in average growth of 2.5% y/y. We see several tailwinds to growth this year, including rising household income, a smaller drag from monetary tightening, recovery in manufacturing activity and a generally improving business climate.

Last mile of disinflation is ahead of us. Although global geopolitical tensions could in theory spark inflation, their effect so far has been rather limited. Meanwhile, decreasing inflation expectations and falling prices of primary commodities suggest a continuation of the downward inflation trend.

Major central banks like the ECB and Fed are finished hiking, as is the NBS, but it is still difficult to pinpoint the exact start of policy easing. That said, in its latest forecast, the ECB has slashed its inflation projections, but policy-makers still need a little bit more evidence that inflation is heading back to targeted levels.

In the first two months of the year, Serbian papers have outperformed peers, as investors hoped for an improvement on the investment grade front. After Fitch ‘disappointed’ investors, interest eased off a bit, although we have not seen a meaningful correction in yields. On the local front, things are also looking livelier this year.

While the ruling coalition is discussing the reshuffling of the government, opposition is contemplating the political platform for the new Belgrade elections.

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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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