The Serbian economy should continue to slow down in 2023 due to theinflation high (around 12% in 2022), the lower demand from the main trading partners and the increase in financing costs which will weigh on consumption, exports and private investments. The data Allianz confirm how price tensions are eroding the purchasing power of families, with consumption destined to slow down further.
To stabilize inflation expectations, the National Bank of Serbia (NBS) increased the reference rate on eight occasions by a total of 350 basis points to 4,5% by the end of 2022. The central bank's sudden change of pace will further weigh on private investment as financing costs rise. Modest support is likely to come from government spending in the form of aid to households and businesses to cope with rising energy prices. Furthermore, the minimum wage is likely to increase in 2023, impacting inflation.
24-month stand-by agreement (SBA) with the IMF
In this scenario the government has agreed on a stand-by agreement (SBA) of 24 months with the IMF, giving Serbia access to financial support of 2,4 billion euros. The agreement aims to ease financing pressures. In exchange for financial support, Belgrade accepted IMF-monitored reforms. As a result, the government deficit is likely to narrow in 2023 as the government curbs spending with no tax increases expected.
Il current account deficit is expected to decline in 2023, but remains at a high level compared to the previous 7 years. The significant goods trade deficit is expected to reduce only marginally due to the country's dependence on imports.
Italy is Serbia's third trading partner, after China and Germany
The data published by SACE confirm theItaly as a third commercial partner, afterwards Germany e China, and with an exchange of goods between the two countries which in 2022 exceeded 3,7 billion euros (+11%). Made in Italy towards Belgrade has grown by double digits: almost +15% and with a good degree of diversification.
Instrumental mechanics confirms itself as the first sector of Italian export with a weight of 16,4% and a growth of 9,9% compared to 2021; a positive trend, but not as much as that of textiles and clothing, which represents 14,3% of the total and which recorded an increase of 26,7% compared to the already brilliant performance of 2021. This is followed by rubber and plastic and metals (almost 11 % both), products requested by the dynamic Serbian industry (energy, agri-food, infrastructure).
Le Italian imports in 2022 they recorded an increase of 5,8%, driven by textiles and clothing, metals, rubber and plastics, electrical appliances and wood products which together account for almost 69%. In the first 6 months of 2023, Italian exports confirmed the positive trend (+6% trend), while the import data showed a slowdown (-16,1%), leading to a temporary contraction of trade (-3,3 ,XNUMX%).
Progress towards a more favorable operating environment for foreign companies, such as the establishment of the Agency for the Development of Serbia and the creation of 15 free zones with incentive administrative and tax systems, are the basis of the solid Italian presence in the country with approximately 1.200 companies with a share of Italian capital.
