National Bank of Serbia raises growth forecast as inflation hits 1.9%

The National Bank of Serbia (NBS) has reported a significant slowdown in annual inflation and an acceleration in economic growth. According to Governor Jorgovanka Tabaković, inflation fell to 1.9 percent in July, dropping below the central target of 3 percent. This decline was attributed to strong fruit and vegetable yields, government measures, and stabilized food prices, which saw a 6.1 percent year-on-year decrease in July.

Concurrently, Serbia's real GDP growth accelerated to 3.6 percent year-on-year in the second quarter. Due to these robust economic results, the NBS has upwardly revised its annual growth projection from 3.0 percent to 3.2 percent. The service sector, particularly trade and tourism, has been a primary driver of this expansion.

Despite the positive indicators, the NBS maintains a cautious stance regarding interest rate decisions due to global uncertainties, including developments in the Middle East and fluctuations in energy prices. The bank noted that Serbia's external position improved in the first half of the year, with exports covering a record 95 percent of imports.