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 Inflation Report, Belgrade, 14 February 2024. 

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

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

Welcome to the presentation of the February Inflation Report.

As usual, in today's conference we will present our new projections and expectations for the coming period. Before that, however, I would like to look back at the year behind us, a year fraught with challenges and new geopolitical uncertainties that seem to have become characteristic of modern times. Even in such circumstances we were successful in achieving our objectives and projections from a year ago. Before I elaborate in detail on current macroeconomic developments and our new projections, allow me to present several facts and figures relating to our projections presented here one year ago. Specifically:

• Already in February last year, when inflation was just shy of its peak, I pointed out that it would be halved in late 2023. This has materialised, with end-2023 y-o-y inflation at 7.6%. Back then, as now, we expected inflation to retreat within the target band by mid-2024.
• Consistent with our expectations, GDP growth picked up speed in H2 2023 and real growth measured 2.5% in the year as a whole. Let me remind you that, a year ago, we projected economic growth in the range of 2–3%, with central projection at 2.5%. At the time, we projected that, due to the planned implementation of investment projects, growth would accelerate to the range of 3–4% this year, with central projection at 3.5%, the same as in our current forecast. We expected economic activity to gather further momentum in the coming years and have now revised up our GDP growth projection for 2025 and 2026 to the range of 4–5%.
• Thanks to a powerful improvement in the external position in 2023, the current account deficit was much lower than projected a year ago. It measured only 2.6% of GDP, reflecting an improved energy balance and robust growth in manufacturing and services exports. FDI inflow climbed to a new all-time high of EUR 4.5 bn. As a result, FX reserves rose to a new record high of close to EUR 25 bn at end-2023, topping all reserve adequacy metrics. It is equally important that FDI inflow fully covered the current account deficit for the ninth consecutive year, and even exceeded it multiple times in 2023.