Economic and Business Environment of SERBIA
NBS maintains the key interest rate at 6.5%.
The Executive Board of the National Bank of Serbia (NBS) decided on Thursday, November 9, to keep the key interest rate at 6.50%. Deposit (5.25%) and lending (7.75%) interest rates also remained unchanged. According to the NBS announcement. “The Council’s decision was motivated by the further easing of global inflationary pressures, the downward trajectory of inflation at home. In addition, monetary conditions in the past period have been tightened through the main policy tool – the interest rate, as well as in September increasing the reserve requirement ratio, with the full effects of these measures yet to manifest.”
October annual inflation at 8.5%
According to the announcement of the Statistical Service of Serbia, the October monthly inflation reached 0.3%, while the annual inflation reached 8.5%. By groups, price increases were noted in: Education (2.9%), Clothing and Footwear (1.7%), Health (0.8%), Alcoholic beverages and tobacco, Furniture, household equipment and regular household maintenance, restaurants and hotels (by 0.5%), Housing, Water, Electricity, Natural Gas and other fuels (by 0.3%) and in the Transport and Leisure and Culture groups (by 0.2%). A decrease in prices was noted in the Communications group (-0.1%). Prices of other goods and services were mostly unchanged.
3.6% growth in Q3 2023
The Statistical Service of the Republic of Serbia (RZS) announced that GDP growth in the third quarter reached 3.6% this year compared to the same quarter in 2022, also adding that the growth, fueled mainly by the construction and agricultural sectors , was 1.3% higher than in the second quarter of the year. The announcement also states that the country’s total foreign trade amounted to 54.4 billion euros in the first 10 months of this year, a decrease of 1.6% compared to the corresponding period in 2022. However, the decrease mainly comes from the decrease of the value of imports. In particular, goods worth 23.9 billion euros were exported (increase of 4.9%) while imports amounted to 30.5 billion (decrease of 6.1%) with the deficit standing at 6.5 billion euros or 32, 4% less than in 2022. The figures also show that 78.7% of imports were covered by exports compared to 70.2% last year.
The implementation of the eCustoms system begins
The Serbian customs authorities have announced the launch of the eCustoms application, to automate and modernize customs procedures in accordance with EU standards. The European Union has invested approximately 9 million euros in this project. During the presentation of this new system at the Chamber of Commerce of Serbia (CCIS), it was mentioned that it has been launched in an effort to upgrade the customs sector and facilitate international trade, and that the system has been implemented on a pilot basis successfully since the end of May, and that by the end of December 2025 all three IT systems – for imports, exports and customs decisions – are expected to be fully implemented. The deadline for the completion of the project is the end of May 2026.
The Deputy Minister of Finance, Mr. Gojko Stanivuković pointed out that by improving the capabilities of the Customs Administration and automating the customs systems, harmonization with EU customs regulations will be ensured, which, according to him, is one of the most important steps to fulfill the requirements for the closure of Chapter 29, which concerns the Customs Union.
EU: Serbia’s economy will grow by 2.2% this year
According to the forecasts of the European Commission, Serbia’s economy is expected to grow by 2.2% this year, by 3.1% in 2024 and 3.7% in 2025. The projected growth is attributed to the expected increase in private consumption, the lower inflation and higher investment. The Commission also predicts that the eurozone will avoid recession this year, with growth of 0.2% expected in the fourth quarter, and 0.6% overall in 2023. Accordingly, growth of 1.2% is forecast in 2024 and 1.6% in 2025.
Experts expect a sharp drop in real estate prices
According to the data of the State Geodetic Authority (RGZ), the number of real estate sales contracts in Serbia decreased for another consecutive quarter, and in particular by 15.9% compared to last year. According to experts, this shows that fewer and fewer people are willing to buy properties at the offered prices, which will result in property prices definitely falling in 2024, with the drop becoming visible in about 3 to 6 months. While in the first half of 2023, the State Geodetic Authority (RGZ) recorded 13% fewer real estate sales contracts in Serbia, in the third quarter, the decrease amounted to 15.9 percent. According to Mr. Vladimir Djukanovic, economist and real estate consultant, the drop is expected to rise from 5 to even 20%. According to him, during the coronavirus pandemic a large amount of money was printed which then led people to invest massively in real estate, which contributed to inflated prices. However, in the next period, a reversal of this trend is expected, with prices following a downward path.
Notes from the European Commission on Public Procurement
According to the annual report of the European Commission (EC), Serbia should work on further harmonizing its public procurement legislation with the relevant EU Directive from 2014. In particular, Serbia should pay special attention to amendments to the law on public-private partnerships and concessions and to ensure that publicly funded projects are subject to public procurement procedures. According to EC data, the public procurement market has grown to a total of €5.6 billion in 2022, with the share of tenders being closed with only one offer remaining very high (51%). The EC also points out that Serbia should pay attention to public procurement rules in accordance with intergovernmental agreements, and respect public procurement principles in accordance with the EU acquis.
Family income lower than average wage
The Statistical Service of Serbia (RZS) announced that the average monthly household income in Serbia in 2022 was lower than the average salary. In particular, in its report RZS states that the average monthly income for households was 78,393 dinars (approx. 670 euros), with 49.9% of households receiving their income from wages and 32.1% from pensions. The household income was lower than the average monthly salary, amounting to 84,227 dinars (approx. 720 euros). The average monthly household income in urban areas was 80,697 dinars (690 euros) compared to 74,644 (640 euros) in rural areas. Average household income is highest in Belgrade (90,056 dinars or about €770) and lowest in southern Serbia (73,510 dinars or €630).
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