Serbia’s Jan-Jul current account gap drops 55% y/y to EUR 910mn

By bne IntelliNews September 19, 2013

Serbia's current account deficit narrowed 55% y/y to EUR 910mn in January-July on the back of falling trade gap and rising remittances inflow, the central bank said. The reading accounted for 2.7% of the full-year GDP projection, down from 6.8% of GDP a year earlier.

The January-July trade deficit improved to 6.7% of the GDP forecast (EUR 2.2bn) from 10.9% of GDP (EUR 3.2bn) a year earlier due to a strong exports growth which offset a mild increase of imports. Exports climbed 20% to EUR 7.9bn over the period, supported by higher sales of cars, chemicals and oil refining products. Imports, on the other hand, recorded a mild 2.9% y/y increase to EUR 10.2bn in January-July. The seven-month current transfers’ surplus rose 8.1% y/y to 1.8bn, lifted by a 13% y/y rise in private remittances to EUR 1.3bn.

The financial account surplus narrowed 57.7% y/y to EUR 810mn in January-July as recovering FDI and higher portfolio investments couldn’t offset the negative balance of the other investments.

Net FDI equalled to EUR 391mn in January-July, swinging from a negative EUR 95mn a year earlier. They covered 43% of the current account gap. January-July net portfolio investments rose to EUR 1bn from EUR 99mn a year earlier.

Serbia's current account deficit is projected to fall below 7% of GDP in 2013 from 10.5% of GDP in 2012, on the back of rising automobile and oil products sales abroad.

FDI are also expected to increase to EUR 700mn this year after dropping to a ten-year low level of EUR 232mn in 2012. In particular, Serbia hopes UAE's leading agriculture products supplier - Al Dahra, to invest EUR 100mn in building a large irrigation system in fertile northern Serbia and a further EUR 100mn in the acquisition of several farming companies. Furthermore, Abu Dhabi's Mubadala is expected to start the construction of a new chip factory.

Serbia's balance of payments, EUR mn Jan-Jul'12 Jan-Jul'13 Change,y/y,%
Current account -2,035.5 -910.2 -55.3
Foreign trade gap, goods and services -3,248.8 -2,209.6 -32.0
Income,net -449.5 -498.2 10.8
Current transfers 1,662.7 1,797.6 8.1
-- private remittances (inflow) 1,135.0 1,283.2 13.0
Financial account 1,913.5 809.8 -57.7
FDI,net -94.8 391.1 /
Portfolio investment,net 98.8 1,014.1 926.8
Other investment,net -237.0 -555.5 134.4
Change in NBS reserves (-increase) 2,146.6 -39.9 /
Overall balance -2,146.6 39.9 /
Source: NBS      

Related Articles

Russia keeps Serbia waiting for promised MIGs

Russia plans to deliver six used MIG 29 aircraft to Serbia by end-2017, Russia’s Federal Service for Military-Technical Cooperation (FSMTC) Director Dmitry Shugaev said on July 19, Sputnik ... more

Fiat workers end 3-week strike that halted production at Serbia's top exporter

Production at the Fiat Chrysler Automobiles (FCA) Srbija factory in Kragujevac will restart on July 19 after workers and Prime Minister Ana Brnabic agreed on the evening of July 18 to end ... more

Evolution Equity Partners closes $125mn cybersecurity-focused fund

Evolution Equity Partners announced on 17 July the final closing of a new fund with total capital commitments of $125mn to make investments in cybersecurity and next generation enterprise software ... more