Serbia's five-month current account deficit shrank 53.4% y/y to EUR 758mn after in May alone the current account recorded a surplus in current foreign transactions, the central bank said. The foreign transactions' surplus came amid higher remittances inflow and a lower outflow on account of interest payments on one hand, and a rise in exports from September onwards, on the other.

The five-month current account was marked by lower external imbalances and high commodity exports thanks to increased sales abroad of cars, chemicals, oil refining products and electronics. Jan-May exports thus rose 21% y/y to EUR 4bn although agriculture exports in the period were unusually low.

Imports, on the other hand, edged up only 2% in the first five months, the central bank said in a statement without giving their value. It has not yet issued detailed data on the Jan-May balance of payment. According to the statement, the investments activated at home helped substitute the imported in previous periods goods with those produced domestically.

Furthermore, Jan-May exports were on average 30.6% higher, while imports 9.1% lower than the pre-crisis ones and the exports-to-imports cover ratio thus reached 70%.

The improvement in Serbia's trade gap since the second half of 2012 came thank to the launch of production in the Serb plant of Fiat, which rolls out the new 500L model and sells it in the US and EU. Furthermore, Gazprom Neft finished a major refurbishment of one of the oil refineries of its Serb unit NIS, raising the quality and the volume of its output.

As a result, the Serbian central bank anticipates that despite the eurozone continuous contraction, Serbia will reduce its current account deficit this year to less than 7% of GDP, boosted by manufacturing industry exports and bigger sales abroad of agricultural goods in the second half of the year.