International Information Centre for Balkan Studies

Serbian government GDP council says growth target reached in Q1

March 9, 2023

The Serbian government’s GDP Growth Council said on Thursday that projected growth will be reached in Q1 2023 following better than expected results in January.

Council chair Prime Minister Ana Brnabic said that economic growth is expected to reach 2.5 percent by the end of the year, a press release said.

The Council said that more investments are needed in road, rail and health infrastructure projects to maintain sustainable growth. Brnabic said that the focus will be on expanding exports of domestic products to new markets.

Source:  https://n1info.rs/english/news/serbian-government-gdp-council-says-growth-target-reached-in-q1/ 

National Bank of Serbia again raises key policy rate

March 9, 2023

At its meeting on Thursday, the National Bank of Serbia (NBS) Executive Board voted to raise the key policy rate by 25 bp, to 5.75 percent. The deposit facility rate was kept at 4.50 percent, while the lending facility rate was raised to 7 percent, said the NBS.

“In its decision-making, the Board was guided by the persistently high global cost-push pressures and imported inflation, despite the signs of easing, as well as the necessity to contain their second-round effects on price growth at home through inflation expectations and to impact a part of demand-side pressures. The NBS thus helps inflation to strike a downward path and retreat within the target tolerance band until the end of the projection horizon. The transmission of the rate increases so far to the rates in the markets of money, loans and savings signals the effectiveness of the monetary policy transmission mechanism via the interest rate channel. Moreover, by maintaining the relative stability of the dinar against the euro, the NBS also significantly contributes to containing the spillover effect of rising import prices on domestic prices, and to overall macroeconomic stability amid elevated global uncertainty,“ the NBS said an a press release.

It was added that the Board stated that “global cost-push pressures have weakened, mostly reflecting falling global energy prices, resolution of supply bottlenecks and reduced container shipping rates, which should lead to the slowing domestic inflation in the coming period.“

“Still, China’s lifting of restrictive containment measures could speed up global economic activity and bolster demand for energy and other primary commodities, slowing the decline in global inflation, while greater-than-expected tightening of monetary policies by leading central banks would work in the opposite direction. Developments in the international financial market and capital flows to emerging economies will also depend on the pace of the Fed’s and the ECB’s monetary policy tightening. Caution is needed in monetary policy conduct due to the persisting geopolitical tensions, including the risk that Russian oil supplies to the global market could be slashed in the coming months and not be offset by higher supply from other OPEC countries, driving up oil prices. Besides, the indirect effects of elevated prices of energy and industrial raw materials in the past period, along with a tight labor market, continue to fuel core inflation in most countries,“ said the press release.

The NBS noted that in January, inflation in Serbia measured 1.4 percent per month, and 15.8 percent y-o-y, “which was in accordance with the Executive Board’s expectations.“

“As before, around two-thirds of the contribution to headline inflation originated from food and energy prices, on which monetary policy measures have a limited effect as growth in these prices is largely a consequence of developments in the international environment. Core inflation (measured by the change in CPI excluding food, energy, alcohol and cigarettes) is still trending at a much lower level than headline inflation – it equaled 10.4% y-o-y in January, due to a significant contribution of the preserved relative stability of the exchange rate,“ said the NBS.

It added that, according to the medium-term February projection, y-o-y inflation is expected to stay elevated in the remainder of Q1 2023, notably as a consequence of the continued transmission of high cost-push pressures from the prior period onto the prices of food and other industrial products, as well as adjustments in electricity and gas prices.

“Thereafter, inflation should strike a downward path and decline more sharply in the second half of the year, returning within the bounds of the target tolerance band in mid-2024. Past monetary tightening, the expected weakening of the effects of global factors underpinning the hike in energy and food prices in the prior period, slowdown in imported inflation as well as lower external demand amid anticipated slackening of global economic growth should act towards soothing inflationary pressures,“ said the NBS.

Source:  https://n1info.rs/english/news/national-bank-of-serbia-again-raises-key-policy-rate/ 

Serbia among 10 European countries with oldest populations

March 2, 2023

According to the data published in the Health Statistics Yearbook, Serbia is on the verge of demographic aging, with its birth rate at the lowest level in the past ten years.

At the same time, the average age of the population rose from 40.2 to 43.4 in the past 10 years which makes Serbia one of the ten countries with the oldest populations in Europe, reads the report published by the Dr Milan Jovanovic Batut Public Health Institute, the daily Politika reported.

The number of women of child-bearing age (15 to 49) has dropped by 2.4 percent thus reducing the potential for more births in the country.

Due to such demographic trends, the working population, people from 15 to 65 years of age, dropped from 67.3 percent in 2002 to 65 percent in 2020.

According to Serbia’s Statistical Office, every fifth person in Serbia is over 65 while the number of children in the general population dropped from 16 percent to 14.3 percent in the period 2002-2020.

The population aging trend has also been registered in other European countries taking the average age in the European Union to 44.4 years, two years more than in 2012.

Source:  https://n1info.rs/english/news/serbia-among-10-european-countries-with-oldest-populations/

Average net salary in December 84,227 dinars

February 24, 2023

Average net salaries and wages in Serbia in December 2022 amounted to 84,227 dinars (1 euro – 118 dinars), said the Statistical Office of the Republic of Serbia (RZS).

Median net salaries and wages for December 2022 amounted to 60,413 dinars, meaning that 50 percent of employees realized wages and salaries up to the mentioned amount.

Even though, compared to December 2021, average net salaries and wages in December 2022 increased by 12.9 percent in nominal terms, according to the RZS it decreased by 1.9 percent in real terms, meaning that less goods and services could be purchased for this amount of money in December 2022 than in the same month of 2021.

“Average gross salaries and wages calculated for December 2022 amounted to 115,315 dinars, while average net salaries and wages amounted to 84,227 dinars,” said the RZS.

Increase of gross salaries and wages and net salaries and wages in the period January–December 2022, relative to the same period last year amounted to 13.8 percent in nominal terms, i.e. 1.7 percent in real terms.

“Compared with the same month last year, average gross salaries and wages for December 2022 increased by 12.8 percent in nominal terms, and decreased by 2.0 percent in real terms, while average net salaries and wages increased by 12.9 percent in nominal terms and decreased by 1.9 percent in real terms,” said the RZS.

Source:  https://n1info.rs/english/news/average-net-salary-in-december-84227-dinars/

Serbia to get 600 million € from EU for railways

February 21, 2023

Serbia will soon receive 600 million Euro from the European Union to reconstruct the railway between the southern city of Nis and Belgrade, the Demostat portal said on Tuesday.

It said that an agreement will be signed by the end of February for the largest single grant the country has received from the EU to date.

The reconstruction of the 230 kilometers of railway will cost a total of 2.2 billion Euro with 1.1 billion coming from the European Investment Bank as a loan with the rest from the Serbian budget. The reconstruction is planned to be finished by 2029 to allow speeds of up to 200 KmH.

The railway between Belgrade and Nis is a part of the Transeuropean transport network, connecting the southern part of the EU (Greece) with Hungary. It remains the key route in connecting the Western Balkans, EU and Turkey.

Source:  https://n1info.rs/english/news/serbia-to-get-600-million-e-from-eu-for-railways/

Brnabic-IT sector reports exports of 2.6 billion Euro

February 16, 2023

Serbian Prime Minister Ana Brnabic said on Thursday that the country’s IT sector reported exports of more than 2.6 billion Euro in 2022.

“Excellent news for Serbia: according to official data, exports of our IT sector in 2022: 2.692 billion Euro (a growth of 45 percent compared to 2021),” Brnabic worte in a Twitter post.

She added that Serbia’s imports of IT services totaled 732 million last year raising the trade surplus by 48.8 percent.

Brnabic recalled that Serbian President Aleksandar Vucic formed an IT Council when he was prime minister in 2016 with the aim of raising the IT sector trade balance to 1.5 billion Euro. “They told us that was impossible… We met the goal and passed it,” she said.

Source:  https://n1info.rs/english/news/brnabic-it-sector-reports-exports-of-2-6-billion-euro/

EBRD amends growth projections for Serbia

February 16, 2023

The European Bank for Reconstruction and Development (EBRD) has amended its projections for Serbia to 2.3 percent for 2022 and 2 percent for 2023.

The February 2023 projections were lowered by 1 percent for 2022 and 1.3 percent for 2023 compared to the projections in September last year.

The EBRD said that economic growth in the Western Balkans is expected to slow to 2.2 percent, reflecting weak external demand, persistently high inflation and tighter financing conditions. “Growth is seen picking up to 3.4 per cent in 2024,” it added

Source:  https://n1info.rs/english/news/ebrd-amends-growth-projections-for-serbia/


NBS chief says inflation lower than projected

February 14, 2023

Inflation in Serbia is at a lower level than projected, National Bank of Serbia (NBS) Governor Jorgovanka Tabakovic said on Tuesday.

“We now expect inflation to return within the target tolerance band in mid-2024, which is sooner than previously expected,” she told a presentation of a report on inflation, adding that inflation this year and next could also be lower than projected.

According to Tabakovic, the projected 2.0%–3.0% GDP growth rate for this year could be realized because of lower global energy prices and a global economic slowdown which is weaker than expected.

“The current account deficit in 2022 was lower than projected in November and amounted to 6.9% of the GDP, as a result of faster real growth in goods and services export and lower than expected energy import at the end of the year. According to our new projection, this year, we expect the share of the current account deficit in GDP to remain similar as in 2022, instead of more than 9% as expected in November,” the NBS Governor said, and added that the current account deficit was fully covered by net FDI which totaled 4.4 billion Euro or 7.1% of the GDP.

She said that the country’s hard currency reserves are at a record high of 20.9 billion Euro with foreign investors showing high interest in Serbian bonds.

Source:  https://n1info.rs/english/news/nbs-chief-says-inflation-lower-than-projected/

Serbian central bank again raises key policy rate

February 10, 2023

The Executive Board of the National Bank of Serbia (NBS) on Thursday again raised the key policy rate by 25 bp, to 5.5 percent. The rates on deposit and credit facilities were raised by the same amount, to 4.5 percent and 6.5 percent, respectively.

“In its decision-making, the Board was guided by the persistently high global cost-push pressures, despite the signs of easing, and the necessity to contain their second-round effects on price growth at home through inflation expectations and to impact a part of demand-side pressures,” said the NBS in a press release.

It added that, by doing this, “the National Bank of Serbia helps inflation to strike a downward path and retreat within the target tolerance band until the end of the projection horizon.”

“Today’s hike is the eleventh in a row – since April 2022, the rate has been raised by 450 bp in total. The transmission of the rate increases so far to the rates in the markets of money, loans and savings signals the effectiveness of the monetary policy transmission mechanism via the interest rate channel. Moreover, by maintaining the relative stability of the dinar against the euro, the NBS also significantly contributes to containing the spillover effect of rising import prices on domestic prices, and to macroeconomic stability amid elevated global uncertainty,” explained the Bank.

The Executive Board said that the global growth outlook for this year is somewhat better than expected until recently given that there are signs that global cost-push pressures are easing and that China dropped its zero-Covid policy.

“The weakening of global cost-push pressures reflects falling prices in the energy sector – of gas in Europe and of crude oil globally, the resolution of supply bottlenecks and reduced container shipping rates,” it noted.

However, the Board emphasized that caution should be exercised in monetary policy conduct as more robust growth in China would probably push up the prices of energy and other primary commodities and make it more difficult to fight inflation, which is showing signs of retreating from multi-decade highs globally.”

In addition, the indirect effects of elevated prices of energy and industrial raw materials in the past period are still fueling core inflation and – along with a tight labor market – are slowing the disinflation process in a number of countries.

In late 2022, y-o-y inflation measured 15.1%, with around two-thirds still originating from food and energy prices. As in other countries, over the past months the contribution of energy prices has been declining and that of food prices has continued up.

Even though they slowed down, producer and import prices continue to record relatively high y-o-y growth rates, impacting domestic core inflation. However, core inflation continued to move below headline inflation and measured 10.1 percent y-o-y in December, said the NBS.

The Board expects inflation to remain elevated in Q1 this year, as a consequence of continued spillover of the high cost-push pressures from the prior period and the hike in household electricity and gas prices. In the remainder of the year, and especially in the second half, the Board expects inflationary pressures to ease on the back of past monetary tightening, the anticipated waning of the effects of global factors driving energy and food price growth in the prior period, slower imported inflation, and lower external demand, said the press release.

According to preliminary data of the Statistical Office of the Republic of Serbia (RZS), Serbia’s real y-o-y GDP growth amounted to 0.4 percent in Q4 and 2.3 percent in 2022 overall. The largest contribution to growth in Q4 came from services, owing to continued positive trends in the labour market. Despite headwinds from external demand, industrial production also provided a positive contribution, mainly as a result of the recovery of the electricity supply sector.

One the other hand, agricultural production recorded a decline relative to the previous year because of the drought, while construction activity slackened amid a hefty rise in the cost of construction materials and other inputs. The Executive Board judges that lower external demand in the first half of the year, notably from the euro area, will slow down manufacturing and exports, which will however gather pace from the second half of the year as the effects of factors that weighed on external demand dissipate, said the Bank.

Depending on movements in the key monetary and macroeconomic factors from the domestic and international environment, as well as on how the global geopolitical situation evolves, the NBS will assess whether there is a need for additional tightening of monetary conditions and to what extent, while taking into account the expected effects of past monetary tightening on inflation going forward. Delivering price and financial stability in the medium term remains the priority of the NBS’s monetary policy, along with supporting further economic growth, said the NBS.

The next NBS Executive Board rate-setting meeting will be held on 9 March 2023.

Source:  https://n1info.rs/english/news/serbian-central-bank-again-raises-key-policy-rate-2/

Serbia sells another 105 million Euro in bonds

February 8, 2023

Serbia sold Dinar bonds worth some 105 million Euro at auction on February 7, the Finance Ministry’s Public Debt Administration said.

“At the auction of 12-year RSD Government Bonds of the Republic of Serbia, issued on February 18th, 2020 reopened on February 7th, 2023 auction volume amounted to RSD 39,871,590,000 with a coupon rate of 4.50%,” a press release said.

It added that bonds worth 12.351 billion Dinars (about 105 million Euro) were sold.

“Government Bonds were sold at YTM of 7.10 percent and maturity date is on August 20th, 2032. The annual coupon is 4.50% and will be paid semi-annually. Payment dates are every February 20th and August 20th until the maturity date,” the press release said.

Source:  https://n1info.rs/english/news/serbia-sells-another-105-million-euro-in-bonds/

Slobodan Stankovic, one of the richest people in Bosnia, passed away

February 7, 2023

Slobodan Stankovic, the owner and director of the Banja Luka company "Integral inzenjering" and one of the richest people in Bosnia and Herzegovina, has passed away.

The news of his death was published by the Republika Srpska (RS) entity public emitter – the RTRS. Stankovic, who died at the age of 74, was born in 1949 in Bosanska Krupa, and since 1957 he lived in Banja Luka.

In 1989, he founded the company “Integral inzenjering” in Laktasi, which over the years would become the largest construction company in the RS, engaged in the construction of all the highways in the entity, the bridge over the Sava near Gradiska, the hydroelectric power plant in Vrbas, the RS Government building, etc. The company was also employed in the region as well – in Serbia on the construction of Corridor 10, in Croatia on the construction of access roads to the Peljesac Bridge.

This year Stankovic was honoured by the RS President, Milorad Dodik, with the Order of the RS flag with a golden wreath, on the occasion of RS Day.

In October 2022, the United States imposed sanctions on Slobodan Stankovic and his company.

Both Stankovic and “Integral” were allegedly linked to corruption in the construction sector, where “Integral” won some of the biggest projects in the RS thanks to its ties to the political leadership.

Stankovic is the former owner of Alternativna Television from Banja Luka, which is also under US sanctions.

Source:  https://n1info.ba/english/news/slobodan-stankovic-one-of-the-richest-people-in-bosnia-passed-away/

Demostat-EU companies by far the biggest investor in Serbia

February 7, 2023

According to the National Bank of Serbia (NBS) and Serbia’s Statistical Office (RZS) data, the European Union (EU) was Serbia’s largest trade partner from 2010 to 2021, and more than 63 percent of the total foreign direct investments in Serbia came from EU-based companies, said the Demostat Research and Publishing Center.

The Center said data from the European Commission, the International Monetary Fund (IMF) and the RZS on trade exchange with the EU show that Serbia’s total trade from 2010 to 2021 revolved around the EU, as the backbone of Serbia’s foreign trade exchange.

Serbia’s total trade with the EU in 2021 reached 30.28 billion euros, which is 23 percent more than in 2020.

It noted that Serbia’s exports to the EU in 2021 set a new record when it comes to the total value of exports to the Union.

In 2021, when the Serbian economy was facing the consequences of the first year of the coronavirus pandemic, total export of almost 14 billion euros was recorded, which surpassed the previous record in exports to the EU from 2019 that amounted to 11.4 billion euros, said Demostat.

A significant increase in the coverage of imports from the EU was also recorded. In 2021, 85 percent of Serbian imports of goods from the Union were covered by exports from Serbia to the EU.

The EU members states that stand out as Serbia’s particularly important trade partners include Germany, Italy, Hungary and Romania, to which Serbia exports most of its goods, while it imports most goods from Germany and Italy.

Demostat noted that EU was also Serbia’s largest foreign trade partner in 2010, with almost 10 billion euros in exchange value.

Source:  https://n1info.rs/english/news/demostat-eu-companies-by-far-the-biggest-investor-in-serbia/

EU signs €70 million Financing Agreement for Energy Support Package for BiH

February 7, 2023

The European Commission has signed and sent the Financing Agreement for the Energy Support Package worth EUR 70 million to Bosnia and Herzegovina that aims to provide assistance to the country's most vulnerable households in coping with rising prices and support energy transition.

“Russia’s war of aggression in Ukraine has led to significant increases in prices for households, including energy bills. The European Union is a loyal friend and partner of Bosnia and Herzegovina, and the Energy Support Package has been designed to assist this country meet the current challenges. The most vulnerable families will receive more than two-thirds of all the funds allocated to BiH. The rest will go to improving energy efficiency in households and businesses, which comes as an investment into the future and will bring further savings,” said the Head of the EU Delegation/EU Special Representative in Bosnia and Herzegovina, Ambassador Johann Sattler.

The package was announced by European Commission President Ursula von der Leyen during her visit to the region in October 2022. It includes a total of EUR 1 billion for the region – EUR 500 million in immediate assistance, and EUR 500 million in medium to long-term support.

Of the EUR 70 million in immediate assistance allocated to Bosnia and Herzegovina, EUR 50 million has been earmarked to mitigate the impact of high prices. The most vulnerable families should receive a cash payment through the FBiH, RS and Brcko District institutions that are responsible for social welfare, the EU Delegation in BiH said. It noted that a further 10 million euros will be disbursed to improve the energy efficiency of 4000 residential buildings, while another 10 million euros has been allocated for around 400 Micro, Small and Medium Enterprises that are facing challenges as a result of the energy crisis.

Medium to long-term support will be available in grants through the EU’s Economic and Investment Plan (EIP) for the Western Balkans.

“These grants will support energy transition through support for the construction of renewable energy projects and the upgrading of energy transmission systems, district heating and schemes for energy efficiency for old apartment buildings. It will also support energy security, through improving gas and electricity infrastructure, including interconnectors. The Energy Support Package can be a starting point for BiH’s energy transition and BiH authorities should use the coming period to design projects to fully benefit from the available funds,” the EU Delegation said.

Source:  https://n1info.ba/english/news/eu-signs-e70-million-financing-agreement-for-energy-support-package-for-bih/

S&P affirms BiH's credit rating at ‘B-B’, revises outlook to positive

February 6, 2023

Standard and Poor's (S&P) said it has affirmed the 'B/B' long- and short-term foreign and local currency sovereign credit ratings on Bosnia and Herzegovina, while revising the country's long-term outlook to positive from stable.

“The positive outlook reflects our view that a potentially less confrontational domestic political environment should hold over the next year while BiH's external imbalances remain contained and the government's debt burden stays low at 22% of GDP by year-end 2023, with most debt owed to official creditors at relatively low-interest rates and long maturities,” the credit rating agency said in a statement.

The global rating agency added that stability has improved in Bosnia and Herzegovina in recent months, with the comparatively timely formation of a state-level government after the October 2022 general election, and the country's economy is expected to continue to grow in 2023, although at a slower pace.

S&P estimates BiH's economy to grow 1% in 2023.

In December 2022, BiH also received EU candidate status, while the likelihood of Republika Srpska — one of the two main entities comprising the country — withdrawing from key state institutions appears to have reduced, S&P notes.

Source:  https://n1info.ba/english/news/sp-affirms-bihs-credit-rating-at-b-b-revises-outlook-to-positive/

PM Brnabic, EBRD President discuss cooperation on strategic projects

February 3, 2023

Serbian Prime Minister Ana Brnabic and European Bank for Reconstruction and Development (EBRD) President Odile Renaud-Basso discussed Friday cooperation in the field of scientific and innovation infrastructure, announcing the expansion of science and technology parks in the cities of Cacak and Nis, and the construction of a new one in Krusevac.

Brnabic thanked Renaud-Basso for the support that the EBRD provides to Serbia, stressing the importance of investments in the field of infrastructure and energy for Serbia’s development, said a Serbian Government press release.

The Prime Minister presented plans for the construction of the BIO4 campus, a unique center that will integrate higher education and scientific research institutions with the economy, as well as capacities and activities in the field of artificial intelligence and the opportunities they provide for the development of our economy, it said.

The EBRD President and Director of the Office for Dual Education and the National Qualifications Framework Gabrijela Grujic signed a Memorandum of Understanding between the Office and the EBRD on the continuation of cooperation and support that the bank provides to the participation of the private sector in educational processes and greater participation of companies in the dual education program.

The meeting was also attended by Minister of Science, Innovation and Technological Development Jelena Begovic and Minister for Public Investment Marko Blagojevic.

Source:  https://n1info.rs/english/news/pm-brnabic-ebrd-president-discuss-cooperation-on-strategic-projects/

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