Serbia is set to have the fastest-growing economy in Europe this year and expects to receive confirmation of its investment credit rating from another international agency, making it easier for businesses to operate, Vice Governor of the National Bank of Serbia, Ana Ivković, told RTS.
Fitch Ratings has assigned Serbia a BB+ credit rating with a positive outlook for an upgrade. Ivković sees this decision as highly beneficial for Serbia, especially given the current geopolitical climate. She also pointed out that Fitch recently downgraded Romania’s credit outlook from stable to negative at the end of January. This puts Romania at risk of falling to a non-investment grade rating within the next six months to a year, according to Ivković’s assessment.
According to Fitch, Serbia is halfway to achieving an investment-grade rating. The report praises Serbia’s effective combination of monetary and fiscal policies, which have contributed to strong economic growth.
Serbia’s average GDP growth from 2021 to 2024 stands at 4.6 percent, which Ivković describes as impressive, especially considering the weak economic growth of key trading partners like Germany and Italy. She also highlighted Serbia’s strong economic performance, noting that last year’s budget deficit was just two percent, better than the planned 2.7 percent.
Public debt in Serbia stands at 47.4 percent of GDP, significantly lower than the European average of 90 percent. Ivković also noted that foreign direct investment (FDI) inflows in 2024 reached 5.2 billion euros, 120 percent higher than the pre-pandemic period.
She also mentioned that the National Bank of Serbia’s (NBS) monetary policies have been commended by rating agencies for bringing inflation down to two percent after the global economic shock. The BB+ rating from Fitch, with a positive outlook for an upgrade, signals to international creditors that Serbia has a stable economy, allowing for loans at lower interest rates.
Ivković emphasized that strong GDP growth is also driving higher wages and employment in the country. Fitch predicts that Serbia’s public debt-to-GDP ratio will drop to around 45 percent by 2027, along with lower interest rates.
Ivković believes that Serbia is in a favorable geopolitical environment to receive an investment rating from Fitch, following a similar rating from Standard & Poor’s. Once Serbia receives an investment-grade rating from Fitch, it is expected to attract new investors, as many investors require ratings from at least two agencies.
She also pointed to the successful issuance of ten-year securities by the Central Bank in January, which saw 111 billion dinars sold in just one day, a record. The bonds were sold at an interest rate of 5.25 percent, which is lower than similar bonds in Hungary and Romania.
Ivković expects inflation to remain within the targeted range of 3 percent, plus or minus 1.5 percent, and to be lower than last year’s average of 4.6 percent.
