NBS Inflation Report: More Than Full Recovery from the Crisis Expected Next Year

The National Bank of Serbia (NBS) has published today on its website the Inflation Report – November 2020, which contains the analysis of current macroeconomic developments and new projections of inflation and economic activity.

The NBS revised upward the GDP growth projection for this year, from -1.5% to -1%, which will be one of the best results in Europe, they say.

– We expect more than full recovery from the crisis next year, with the GDP growth rate of around 6%.

In line with the central bank's expectations, external imbalances narrowed – in the first nine months, the current account deficit was lower by 15% y-o-y, and was fully covered by the net FDI inflow, which remained solid even amidst the pandemic.

– As in the past seven years, inflation in Serbia is low and stable, even in the pandemic. It will continue to move in the lower half of the target band, and will be closer to the lower bound of the target in the remainder of this and during next year – it is said.

In Q3, y-o-y inflation moved in line with the bank's expectations, hovering around its average for the past seven years, and measured 1.8% in September and October.

– Going forward, we expect inflation to move within the lower half of the target tolerance band, closer to the lower bound, until end-2021. Such inflation movements will be supported by disinflationary pressures on account of aggregate demand and international inflation, while the effects of the previous fall in the global oil price will wane gradually. Thereafter, as the rise in economic activity and demand continues, inflation will edge up gradually towards the target midpoint of 3%, but remain below it even in 2022 – they say.

In the period since the previous Inflation Report, the key policy rate was kept unchanged at 1.25%.

Narodna banka Srbije Beograd

National Bank of Serbia

NBS

Jorgovanka Tabakovic

Inflation Report November 2020

GDP

gross domestic product

inflation

coronavirus

covid 19

pandemic

crisis