Serbian town in the winter

Serbia GDP Q2 2018

Serbia: Economy roars ahead in the second quarter on surging fixed investment

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

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