The economic and fiscal situation in Serbia according to the NBS governor

For seven years, inflation in Serbia has been at 2%, and this is a success that has been achieved through the so-called Serbia one step away from the investment rating programme,” said the Governor of the National Bank of Serbia, Jorgovanka Tabaković.

“Serbia has borrowed abroad at an interest rate of 7.25%, and today it borrows at 1.6%. This is a measurable success. In the past, the interest rates on approved dinar loans were 18%, today, they stand at 6.5%,” Tabaković said and pointed out that the inflation in Serbia was 5.7% in the last year. Inflation, she says, averaged 9% from 2008 to 2012, in late 2013 it was 2.2%, while from 2014 to 2020, it stood at 2%.

The predominant factor in this year’s inflation comes from abroad, namely, the inflation is affected by energy, crude oil and natural gas prices, as well as the energy crisis and the prices of raw materials on the stock exchange, especially unprocessed food, Tabaković explains. According to her, the global prices of corn, soy and sunflower have had an impact on Serbian prices.

The NBS governor adds that Serbia has already received EUR 3 billion in foreign direct investments this year and that 2019, the pre-pandemic year, was a record year with EUR 3.8 billion worth of investments.

“Our core inflation is always 2% and what drives the economy is confidence and inflation expectations. Serbia is one of the few countries that has not yet raised the benchmark interest rate, and we still don’t have to do it in order to keep loan instalments at the same level and not hinder the growth that is necessary for the country,” the governor added.

“In the first seven months, wages grew by 8.5 per cent. Our estimate is that, by the end of the year, the average inflation will be 3.7%. The country’s GDP must grow more than salaries and pensions while the inflation at the global level will spill over to our country,” Jorgovanka Tabaković explains.

She adds that all agricultural, food and energy products have become more expensive without a doubt and that the inflation is expected to return to 3% (+/- 1.5) by mid-next year.

(Vecernje Novosti, 27.10.2021)


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