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2019/03/11 / Erste Group Research

RS Macro Outlook: Time to accelerate with structural reforms

2018 was encouraging in terms of growth with the highest real growth rate in the last 10 years (4.3% y/y). Fiscal performance outperformed expectations marking a second consecutive year of a budget surplus, pushing the public debt burden down by 4pp to 53.8% of GDP. The key rate was cut twice early in 1Q18 and remained stable afterwards at 3%, with benign inflation movements throughout the year. The dinar was one of the most stable currencies last year trading between 118-118.5 while the local yield curve compressed further.

We forecast GDP growth to moderate in 2019 by 1pp to 3.3% y/y mostly due to weakening of external demand. Growth profile remains unchanged with private consumption and investments the strongest positive contributors. Net exports is expected to contribute negatively to the headline figure. Monetary policy is seen as accommodative in 2019 supported by the continuation of low-flation environment and renewed dovishness by the ECB. After stabilizing public finances we expect the Government to take on a more expansionary tone this year with special focus on infrastructure investments.

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General information

AuthorErste Group Research
Product nameCEE Country Macro Outlook
Topic in focusFX, Macro/ Fixed income
Economy in focusSerbia
Currency in focusSerbian dinar
Sector in focus-


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