Jorgovanka Tabaković: Overview of recent monetary and macroeconomic trends in Serbia

Introductory speech by Dr Jorgovanka Tabaković, Governor of the National Bank of Serbia, at the presentation of the August Inflation Report, Belgrade, 16 August 2023.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Central bank speech  | 
05 September 2023
by Jorgovanka Tabaković
PDF full text
(318kb)
  |  10 pages

Ladies and gentlemen, esteemed members of the press, dear colleagues,

Welcome to the presentation of the August Inflation Report, where we shall present current macroeconomic developments, our new macroeconomic projections and the measures we have undertaken in the period since the previous Report. As customary, at the very start of the conference, I wish to outline several key facts concerning the current macroeconomic developments and our new projections, which I shall explain later on in detail.

  • First, y-o-y inflation in Serbia is on a downward trajectory, hitting 12.5% in July, down by 3.7 pp from March, when it touched its peak. The data on core inflation, which declined from 11.3% in March to 9.4% in July, 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%. Inflation's return within the target tolerance band is expected in Q2 2024, earlier than we projected in May, on account of further tightening of monetary conditions in June and July.
  • Second, economic growth at home 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, despite the lingering global uncertainty and further tightening of global financial conditions. We expect economic growth to accelerate further in the rest of the year, and reach between 2.0% and 3.0% at the year level. We now estimate that the growth rate will be closer to the lower bound of the projected band. The reason behind our caution are primarily poorer performances of the production sectors of our key trade partners, notably Germany, and lower personal consumption in the year so far.