Country Economic Forecasts > Serbia

Return to growth in 2015 has enabled the government to call early elections, likely to deliver a stronger mandate that will allow acceleration of IMF-driven reforms. This will enable the growth rate to pick up to 1.5% this year and around 2% in 2017, driven by renewed export growth and rising investment as real interest rates continue to fall. Although the current account deficit is set to stabilise around 3% of GDP this year, after sharp falls in 2013-15, this is financeable with rising FDI.Inflation rose back towards the 2.5-5.5% target range in Q1, but the long phase beneath it enabled a further loosening of monetary policy, which will stay relaxed provided the government maintains recent progress in reducing the fiscal deficit. And a primary surplus opens the way to cap public debt below 80% of GDP.The Progressive Party government is set to retain a strong majority after early elections on 24 April, enabling it to embark on the tougher public sector reforms and privatisation needed to complete the IMF programme. Commitment to further fiscal deficit reduction and changes to speed up EU accession talks will lift private investment, maintaining recent rapid improvement in the business environment. But reforms could still be derailed by public reaction against job losses and welfare cuts.