According to the latest report from Macroeconomic Analysis and Trends (MAT), Serbia’s GDP grew by 4.3 percent in the first five months of this year, driven by high-frequency indicators of economic activity. This growth aligns with projections of a 3 to 3.5 percent growth rate for the entire year, with notable increases recorded in April and May.
However, May saw a year-on-year decline in industrial production by 1.1 percent, alongside a 3.3 percent drop in foreign trade. MAT attributes this decline primarily to May having three fewer working days compared to the same month last year.
From January to May, industrial production increased by 2 percent overall, despite the downturn in May. Notably, mining saw significant growth of 28.9 percent, while the processing industry and electricity supply sectors experienced declines.
The production of oil derivatives saw a revival in May after maintenance work at the Pancevo Oil Refinery, yet recorded a 3.6 percent decline compared to May last year, attributed to timing issues.
In the processing industry, which constitutes a significant portion of Serbia’s exports, growth was driven by sectors such as basic metals (up 50 percent), food processing (up 6.4 percent), and computer production (up 96.4 percent year-on-year). However, sectors like clothing, textiles, wood processing, and pharmaceuticals saw declines in production.
In terms of foreign trade, May witnessed a 1.1 percent decrease compared to the previous year, with exports falling by 3.3 percent and imports rising by 0.6 percent. This resulted in a 13.3 percent increase in the trade deficit, amounting to 859 million euros.
Despite challenges, cumulative exports from January to May increased by 0.6 percent year-on-year, while imports grew by 1.2 percent. However, the trade deficit widened by 3.3 percent compared to the same period last year, reaching 3.5 billion euros.
The processing industry remains crucial for Serbia’s exports, accounting for 87.4 percent of total goods exports. Despite a 4 percent increase in exports in the first five months, May saw a 5.7 percent decline, primarily due to decreased exports in sectors other than base metals.
Notably, exports to China surged by nearly 80 percent compared to last year, driven largely by copper exports, which grew by 344.6 percent. Similarly, exports to Turkey increased by 68.1 percent.
MAT highlights that this shift towards non-EU markets like China and Turkey has been pivotal, potentially leading Serbia to achieve greater export coverage compared to its imports with China by the year-end, a trend that could offset subdued demand from the EU markets.
Overall, while Serbia faces industrial challenges and fluctuations in trade, strategic shifts in export destinations are poised to influence economic outcomes positively through the year.
