Bi-Weekly Report 4 – 17 February 2020

The current account balance (CAB) turned into a surplus of 0.2% of GDP in FY:19 (the best outcome in 20 years) from a deficit of 3.7% in FY:18

However, the CAB is set to revert to a deficit of 1.4% of GDP in FY:20, along with recovery in domestic demand

The pro-Presidential ruling Serbian Progressive Party (SNS) is set to secure a landslide victory in the upcoming parliamentary elections (due by end-April)

Broader political continuity is expected after the elections

The resolution of political uncertainties is pivotal to the near-term economic outlook

The FY:19 budget deficit widened slightly by 0.2 pps to 2.0% of GDP, yet outperforming its target of 2.6%, mainly due to under-executed capital spending

Customer deposits remained stable in FY:19 after a small decline in the previous year (down 1.9%)

Credit to the private sector continued to decline in FY:19, albeit at a much slower pace compared with FY:18, reflecting continued efforts by banks to clean up their loan books

Tourist activity weakened further in FY:19 (with receipts contracting by c. 1.0%) -- dragged down by the EU and the UK