Serbia: Economy roars ahead in the second quarter on surging fixed investment
August 31, 2018
According to a comprehensive estimate released by the Statistical Institute on 31 August, the economy performed well in the second quarter, with year-on-year growth coming in at 4.8%. This beat the flash estimate of 4.4% and nearly matched the first quarter’s revised 4.9% (previously reported: +4.6% year-on-year). Q2’s figure reflects the positive impact of monetary easing since September 2017.
The domestic economy performed well in the period. Private consumption expanded 3.1% (Q1: +3.1% qoq), supported by buoyant wage growth, moderate price pressures and double-digit new loan growth to households. Moreover, fixed investment continued to surge (Q2: +12.1% yoy; Q1: +15.1% yoy), likely aided by robust infrastructure investment, easy access to credit and a favorable macroeconomic environment. Government consumption expanded 5.3% (Q1: +2.3% yoy).
On the external front, exports of goods and services grew at a robust pace, thanks to continuing solid demand from regional trading partners (Q2: +7.1% yoy; Q1: +9.5% yoy). However, import growth continued to outpace export growth (Q2: +9.2% yoy; Q1: +12.8% yoy).
Looking ahead, growth should continue to be buttressed by fixed investment, household consumption and exports. In addition, the ongoing collaboration with the IMF—the government recently requested a 30-month policy coordination instrument—should anchor confidence and spur reforms. Downside risks stem largely from the potential for a marked slowdown in the Euro area and other key trading partners, the future evolution of oil prices and the possibility of poor weather dampening agricultural output.
Serbia GDP Forecast
FocusEconomics Consensus Forecast panelists expect growth of 3.6% in 2018, up 0.2 percentage points from last month’s forecast, and 3.3% in 2019.
Author: Oliver Reynolds, Economist