The National Bank of Serbia (NBS) expects the country’s GDP to grow by 0.8% in 2015, the NBS announced on November 19, in its latest quarterly Inflation Report. According to the report, in November the GDP growth projection was revised up compared to August, when the bank said it expected GDP to grow by 0.5%.

The central bank’s projection is more positive than the IMF’s and European Commission’s, with the IMF’s latest expectation being that Serbia's GDP growth for 2015 will be 0.75%, while according to the EC's Autumn 2015 European Economic Forecast, published on November 5, Serbia’s GDP will grow by 0.7% in 2015.

EBRD has the lowest prediction. According to its Regional Economic Prospects in EBRD Countries of Operations report, published on November 5, Serbia’s GDP will rise by 0.5% in 2015.

The latest flash estimate of the country’s statistical office, published on October 30, showed that Serbia’s economy continued to grow in the third quarter, increasing by a real 2.0% y/y, after rising by 1% y/y in Q2. 

The Bank said that the GDP growth rate had been revised up as the rise in investments is estimated to be faster than expected.

“Judging by indicators of investment activity in recent months, investment will be higher this year than what we envisaged three months ago and this is the main reason why we have revised the GDP growth projection for 2015," the bank said.

"Namely, Q3 witnessed a further rise in imports of equipment, newly granted investment loans and the number of issued construction permits. Though the recovery of external demand, especially demand from the euro area, benefits our exports, higher investment should also lead to an increase in imports since Serbia is an import-dependent economy.”

According to NBS, GDP is expected to grow by 1.8% in 2016, which is in line with the EBRD’s forecast but slightly higher than the EC’s, which predicted that Serbia’s GDP will grow by 1.4% in 2016.

Serbia’s central bank expects y/y inflation to stay low until mid-2016, hovering around the lower bound of the target tolerance band. In H2 2016 it is expected to move closer to the 4.0% target.

Year-on-year inflation continued to move below the lower bound of the target tolerance band (4.0±1.5%) in Q3, and amounted to 1.4% in September.