Weekly Report 21-27 June 2016

Tourism industry crisis deepens in May, due to rising security concerns and persisting tensions with Russia

The seasonally-adjusted unemployment rate declines to a 7-quarter low of 9.9% in Q1:16

Albeit still strong, underlying growth in credit to the private sector shows signs of slowdown in May (up 7.5% y-o-y)

Deposit growth gains steam in May, underpinned by strong economic activity

Profitability of the banking system improves in Q1:16, due to higher pre-provision net operating income

Fitch upgrades Serbia’s long-term sovereign debt rating to BB-

Customer deposit growth weakens markedly in the first five months of the year, amid deepening domestic political crisis

Lending activity also loses steam in 5M:15, on the back of weakening loan demand and supply

Unemployment rate declines to a record low of 24.5% and employment growth reaches 2.5% y-o-y in Q1:16

Current account deficit remains broadly flat on an annual basis in Q1:16

Banking sector’s bottom line weakens on an annual basis in Q1:16, mainly due to lower net interest income and higher personnel expenses

The FY:15/16 deficit is set to surpass not only its target of 8.9% of GDP but also the past year’s outcome of 11.5% of GDP

The envisaged fiscal consolidation in 2016/17 is out reach without additional corrective fiscal measures