BELGRADE (Serbia), March 29 (SeeNews) – Serbia's real GDP growth is expected to accelerate from 0.8% in 2015 to 1.8% in 2016 and further to 2.2% in 2017 thanks to monetary policy relaxation, fiscal adjustments, and improvement in the business climate, Intesa Sanpaolo said in its quarterly forecast report on the Balkan country.
Further implementation of structural reforms, and the prospects of recovery in external demand are also listed among factors driving Serbia's economy.
Average inflation in 2016 is projected at 1.7%, below the central bank's lower target band of 2.5% for the second year in a row.
Intesa Sanpaolo's expectations for the first half include low and stable CPI rates, followed by a smooth rise within the target band (4±1.5%) at year-end or the beginning of 2017.
The average key interest rate is projected at 4.1% for Serbia in 2016.
Serbia's c-bank was prompted to sell 520 million euro in the first quarter of the year in order to maintain exchange rate stability, Intesa noted.
Political risks ahead of early elections, as well as risks associated with broad global capital movements, suggest the local currency is likely to remain in a depreciation trajectory with the average exchange rate projected at 122.3 dinars for one euro in 2016.
Last week, Erste Group forecast Serbias GDP growth at 1.5% this year, picking up to 2.1% next year. It saw inflation accelerating to 2.3% in 2016 from 1.7% last year.
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