Erste Bank Research Team
Erste Bank
The Serbian economy is currently performing better than its regional peers, thanks to a strong domestic demand boosted by a tight labor market, solid remittances inflow (7.1% of GDP), high real wage gains (9.3% y/y in 9M24), and a vivid investment activity as the country set in motion its 'Leap into the future 2027' investment program. These factors are expected to continue supporting the headline figure over the forecasted horizon.
After two years of double-digit inflation rates, price growth has finally more than halved in 2024. However, the average inflation for the year is likely to miss the NBS target band for the third straight year in a row. While headline inflation remains in check, core inflation is trending 1pp above headline since June, reflecting strong domestic demand pressure.
Monetary policy remain relatively cautious due to elevated global uncertainty, but also high core inflation. We expected gradual easing to continue albeit more pronaunced during the middle of next year.
To accommodate the need for higher public investments, Serbia has raised its medium-term fiscal ceiling to a deficit of 3% of GDP, but in agreement with the IMF. After a recent statistical GDP revision, the public debt ratio dropped below 50% of the GDP and should remain around the 47% of GDP mark in the upcoming years.
S&P's upgrade of the credit rating to IG status briefly shook up fixed income assets, but Eurobond movements again mostly hinge on core movements, while the domestic RSD curve is still burdened with (il)liquidity problems.
This document is intended as an additional information source, aimed towards our customers. It is based on the best resources available to the authors at press time. The information and data sources utilised are deemed reliable, however, Erste Bank Sparkassen (CR) and affiliates do not take any responsibility for accuracy nor completeness of the information contained herein. This document is neither an offer nor an invitation to buy or sell any securities.
Recommended Content
Editors’ Picks
EUR/USD climbs to multi-week highs near 1.0500 after German and EU PMI data
EUR/USD gathers bullish momentum and rises toward 1.0500 in the European session on Friday. The upbeat PMI data from Germany and the Eurozone, which showed an expansion in the private sector's business activity in January, provide a boost to the Euro and helps the pair push higher.
GBP/USD extends daily rally toward 1.2450 on upbeat UK PMI prints
GBP/USD extends its weekly uptrend and trades at a two-week high near 1.2450 on Friday. The better-than-expected preliminary January PMI data from the UK helps Pound Sterling gather strength as market focus shifts to macroeconomic data releases from the US.
Gold price bulls take a breather near multi-month top amid positive risk tone
Gold price (XAU/USD) enters a bullish consolidation phase during the first half of the European session and oscillates in a range above the $2,770 area, near a multi-month top touched earlier this Friday.
Dogelon Mars pumps more than 85%, whales dump 128 billion coins and realize a profit
Dogelon Mars (ELON) price continues its rally on Friday after rallying more than 18% this week. On-chain data shows that ELON whale wallets realized profits during the recent surge. The technical outlook suggests a rally continuation of the dog-theme meme coin, targeting double-digit gains ahead.
Federal Reserve set for an extended pause
After 100bp of rate cuts the Fed has signalled it needs evidence of economic weakness and more subdued inflation prints to justify further policy loosening. President Trump’s low tax, light-touch regulation policies should be good news for growth.
Trusted Broker Reviews for Smarter Trading
VERIFIED Discover in-depth reviews of reliable brokers. Compare features like spreads, leverage, and platforms. Find the perfect fit for your trading style, from CFDs to Forex pairs like EUR/USD and Gold.