Bi-Weekly Report 25 September - 8 October 2018


Further monetary policy tightening in sight, as inflation surprised on the upside in September

Buoyant tourist activity to contribute significantly to the much-needed external adjustment this year



The NBR maintained its key rate at 2.5% in October

The real estate market "cools off" slightly



The profitability of the banking system improved in Q2:18, mainly on the back of lower provisioning



The IMF reached a staff-level agreement with the Serbian authorities on the completion of the 1st review of the 30-month (non-financing) Policy Coordination Instrument

The current account deficit reversed its upward trend in 7M:18



The "name" agreement was overwhelmingly endorsed by voters in the September 30th referendum but a low turnout raises uncertainty about its timely implementation

External adjustment continued in the first half of the year, with the 4-quarter rolling current account deficit shrinking to a 3-year low of 0.2% of GDP in Q2:18 from 1.3% in Q4:17



GDP growth on track to reach a post-global crisis high of 4.2% this year



The unemployment rate moderated to a post-crisis low of 7.3% in Q2:18, underpinned by continued strong economic activity

The current account deficit almost halved in H1:18, due to an improvement in the ship trade balance



The current account deficit narrowed sharply to 2.4% of GDP in FY:17/18 from a 2½-decade high of 6.0% a year earlier

The capital and financial account, excluding IFI support, covered the CAD comfortably and boosted FX reserves in FY:17/18


Appendix: Financial Markets

Bi-Weekly Report 25 September - 8 October 2018