Tabakovic: Inflation Around 8% at Year-End, GDP Growth 2 to 3%

The governor of the National Bank of Serbia (NBS), Jorgovanka Tabakovic, said that she expected the inflation in Serbia to be 8% at the end of the year, given its downward trajectory relative to March, when it reached its peak.

At the presentation of the August Inflation Report of the NBS, she said that the y-o-y inflation in Serbia was on a downward trajectory, hitting 12.5% in July, down by 3.7 pp from March.

The data on core inflation, which declined from 11.3% in March to 9.4% in July, according to her, suggest that inflation’s slowdown is due not only to the falling global prices of energy and food, but also to the monetary policy measures undertaken by the NBS.

– In the remainder of the year, we expect y-o-y inflation to drop by 1 pp each month, and end the year at around 8% – Tabakovic said.

She pointed out that inflation’s return within the target tolerance band was expected in Q2 2024, earlier than they had projected in May, on account of further tightening of monetary conditions in June and July.

She pointed out that economic growth at home had picked up to 1.7% y-o-y in Q2, on account of the recovery of the construction sector, gradual weakening of the effects of elevated costs in production and the resolution of global supply chain halts.

Tabakovic said that they expected economic growth to accelerate further in the rest of the year, and reach between 2% and 3% at the year level and that the NBS now estimated that the growth rate would be closer to the lower bound of the projected band.

The reason behind their caution, according to Tabakovic, are primarily poorer performances of the production sectors of Serbia’s key trade partners, notably Germany.

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Jorgovanka Tabaković

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