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

KKR's United Group to invest €293mn in Serbia within next five years

United Group, a leading multi-play (Pay-TV, Broadband, Telephony, Mobile) operator in Southeast Europe, majority owned by US private equity firm Kohlberg Kravis Roberts (KKR), plans to invest ... more

Serbia’s central bank cuts key policy rate to 3%

The National Bank of Serbia (NBS) executive board decided to cut the key policy rate again on April 12 to 3%. The bank previously cut the rate to ... more

UN court sentences far-right Serbian politician Vojislav Seselj for war crimes and crimes against humanity

Serbian far-right leader Vojislav Seselj was sentenced on April 11 to 10 years in prison for war crimes and crimes against humanity committed during the civil war caused by the breakup of Yugoslavia ... more