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Fitch Ratings updates Serbia’s economic outlook to positive, reaffirming BB+ rating
(MENAFN) Fitch Ratings has updated Serbia's economic outlook, upgrading it from stable to positive while reaffirming its BB+ credit rating. This revision highlights the country's improving credit fundamentals, which are expected to be bolstered by sustained investment and robust economic growth.
The agency noted that Serbia's economy is projected to grow at a rate above the historical trend, supported by decreasing government debt levels. During the first half of 2024, the general government balance recorded a slight surplus, largely driven by stronger-than-anticipated revenue. Despite this, the Serbian government has maintained its deficit target for the year at 2.2 percent of GDP, demonstrating a commitment to fiscal discipline.
Inflation in Serbia returned to the central bank's target range of 3 percent as of May 2024. However, it slightly exceeded this target in June, reaching 3.8 percent. This uptick was influenced by a combination of factors, including reduced food prices, a drop in energy prices, lower imports, easing real wages, and a tighter monetary policy environment.
Fitch Ratings forecasts that inflation will average 4.4 percent for 2024, before easing to 3.6 percent in 2025 and further to 3.2 percent in 2026. Looking ahead, the agency predicts that Serbia's economic growth will stand at 3.8 percent for 2024, with the potential for further acceleration if infrastructure projects are successfully implemented. Fitch also anticipates that the country's growth will continue to outpace the trend in 2025 and 2026, driven by sustained high levels of investment.
The agency noted that Serbia's economy is projected to grow at a rate above the historical trend, supported by decreasing government debt levels. During the first half of 2024, the general government balance recorded a slight surplus, largely driven by stronger-than-anticipated revenue. Despite this, the Serbian government has maintained its deficit target for the year at 2.2 percent of GDP, demonstrating a commitment to fiscal discipline.
Inflation in Serbia returned to the central bank's target range of 3 percent as of May 2024. However, it slightly exceeded this target in June, reaching 3.8 percent. This uptick was influenced by a combination of factors, including reduced food prices, a drop in energy prices, lower imports, easing real wages, and a tighter monetary policy environment.
Fitch Ratings forecasts that inflation will average 4.4 percent for 2024, before easing to 3.6 percent in 2025 and further to 3.2 percent in 2026. Looking ahead, the agency predicts that Serbia's economic growth will stand at 3.8 percent for 2024, with the potential for further acceleration if infrastructure projects are successfully implemented. Fitch also anticipates that the country's growth will continue to outpace the trend in 2025 and 2026, driven by sustained high levels of investment.
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