From the recession that hit it in 2009, Serbia seems to have recovered. The past few years have been at the mercy of what will be, at least locally, remembered as the “W” recession all Made in Serbia. In fact, starting from 2009, the year in which the country's GDP contracted by as much as 3,5pp, the performance of the Republic of the Balkans was rather uncertain: after the positive dynamics of 2010 and 2011, in 2012 the Serbian GDP was dropped again (-1,5%). 2013 marked the exit of the national economy from this climate of uncertainty and it is expected that 2014 can actually continue in the wake of these recent positive events.
The analysis of Serbia's economic performance is only a part of Country tab released last March from Intesa Sanpaolo Studies and Research Service (by theeconomist Antonio Pesce). The report proposes, in fact, a rather complete picture of the current political-economic situation in Serbia, a picture which, in our opinion, it could be defined as positive.
From a political point of view, the elections that have just passed - which brought the president of the Serbian Progressive Party, Alexander Vucic to the helm of the country - seem to be able to represent a new beginning for Serbia: having left behind the recession of recent years, the country is starting to be led by a pro-European party (which will probably favor rapprochement and integration with the EU) and by a Prime Minister who appears to be ready to contribute important changes to the Serbian socio-economic system (credits to banks to favor the private sector, emergence of the shadow economy, free concessions of building land, etc.).
Also from an economic point of view, the Serbian performance appears quite satisfactory. As reported before, the country has recently come out of a recessionary phase of its economy. The push for economic recovery of Serbia was definitely driven by the growth of industrial production (+3,8% in January this year) and the private sector. national inflation did not represent an obstacle to the country's exit from the recession since, in 2013, it has reached its all-time low, hovering around 2% (above all thanks to the boost of food products whose prices have remained very low). The public deficit/GDP ratio fell to around 4,8% and prompting the MEF to declare its intention to reduce it further. Also Intesa Sp, reports that the country has a sufficient ratio between official reserves and external debt, therefore enough to avoid any alarmism on the part of international operators.
Ultimately, a few aspects could currently be "disputed" for Serbia. First of all the weakness of domestic demand especially by households and the public sector. A weakness, moreover, accompanied by a higher demand for imports than the volume of the country's exhortations which inevitably had some impact on the country's trade balance, leading it to find itself in a situation of deficit. Tuttavia, the Achilles heel of Serbia, especially from the point of view of international operators, remains the government of the economy (in general) e the public debt/GDP ratio (in particular). The country's public debt compared to the Gross Domestic Product has in fact increased by 4,4% if one compares it with the same value of the previous year. Specifically, since public debt stood at around 60% of GDP in 2012, in 2013 there was an increase of the same up to represent 64% of the country's GDP. According to what was stated by the Intesa Sp study, to prevent this ratio from continuing to grow, it would be necessary to be able to achieve a public deficit of less than 4,3% of GDP. The latter figure now represents a target for the Serbian government to be achieved by and no later than 2015.
Despite the results achieved, il rating of Serbia has recently been re-evaluated by the Fitch agency which, to date, considers the Republic of the Balkans as a country “more vulnerable” (from BB- to B+), that is, inclined to change one's attitude in the direction of one international non-honorability of its debts. It must be said, however, that the opinion expressed by Fitch was not accompanied by an equal change of course by other international operators such as, for example, S&P.
In analyzing the country, the Studies and Research Service of Intesa Sp is inclined to support the downgrading of Fitch rather than maintaining it status quo of S&P. And this also in the light of the considerations regarding the satisfactory availability of the country's official reserves and a reserve cover ratio greater than unity (about 2,2).
