Fitch Ratings has affirmed Serbia’s long-term foreign- and local-currency issuer default ratings (IDR) at ‘BB’, with a stable outlook – the National Bank of Serbia has said.
Serbia’s ratings are supported by governance, human development and ease of doing business indicators that exceed the majority of ‘BB’ category sovereigns, Fitch said in a statement late on Friday.
The Agency’s decision to confirm the stable outlook for increasing the credit rating of Serbia was made on the basis of the assessment that economic policy in the future will contribute to further strengthening macroeconomic indicators, improving the business environment and reducing public debt.
Fitch notes that inflation in Serbia is low and stable, fluctuating within targeted values, and will stand at approximately 3% in 2019.
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“Serbia’s economic recovery has been stronger than Fitch expected. Economic growth in 1H18 accelerated by 4.9%, boosted by a strong pick-up in investment activity, as well as higher growth in both household and government consumption. Positive contributions from domestic demand offset negative net exports, where imports of investment-related goods outpaced positive export activity. The stronger cyclical rebound has led Fitch to revise up its real GDP forecast by 0.8%, with the agency now expecting growth in 2018 to reach 4.3%, before moderating towards an average of 3.2% in 2019-2020”, Fitch Ratings adds.
Serbia’s general government debt ratio is forecast by Fitch to reach 54.0% of GDP in 2018, 4.7% lower than 2017’s debt ratio of 58.7%. Fitch expects a stabilisation in the net external debt ratio in 2018-2019 and in both years, net inflows of FDI are projected to cover current account deficits forecast at 5.6% of GDP and 4.9% of GDP, respectively.
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