NBS: Current account deficit to drop below 7% of GDP

BELGRADE Effects of investments and fiscal consolidation should bring down the current account deficit to below seven percent of GDP in 2013. This is according to the forecast of the National Bank of Serbia (NBS). NBS: Current account deficit to drop below 7% of GDP After more than a triple reduction in 2009 and 2010 relative to the pre-crisis period, the current account deficit has widened over the last two years, reaching 10.5 percent of GDP in 2012, the central bank said in its August inflation report. The increase was due mainly to the investment cycle in the automobile and oil industries, which entailed higher imports of equipment and intermediate goods, and to high pre-election fiscal spending in the first half of 2012. The expected improvement this year will be backed by improvements in the trade balance spurred by an increase in export. In the first six months of 2013, the current account deficit was EUR 890.7 million, 53.5 percent lower year-on-year, mainly on account of a considerable increase in exports relative to imports. A rise in exports was the most evident in the automobile industry, primarily owing to Fiat Serbia, but also to producers of car components. Low imports in the same period are due to the completion of investment cycles and low domestic demand. Positive trends regarding a reduction in external disequilibrium are also confirmed by exports which exceeded the pre-crisis level by 36.4 percent in the first six months, while imports fell 9.8 percent below this level. Provided exports and imports stay at the second quarter levels until the end of 2013, all other things being equal, the current account deficit could fall below six percent of GDP this year. The current account deficit equalled 5.7 percent of GDP in the first half of the year. The improvements were due to favourable trade movements, lower interest outflows and higher remittances inflow compared to the same period last year. At the annual level, the current account deficit will fall to around EUR 2.1 billion and the trade deficit around EUR 4.5 billion, which is a reduction of 33.4 percent and 17 percent respectively relative to last year. In addition, the physical volume of exports is likely to accelerate to 11.5 percent, and that of imports to slow to 1.8 percent. Interest outflow will amount to around EUR 950 million this year, and current transfers inflow to around EUR 3.1 billion. A reduction in the current account deficit is expected in the coming years as well, but at a more gradual pace. Tanjug

NBS: Current account deficit to drop below 7% of GDP

After more than a triple reduction in 2009 and 2010 relative to the pre-crisis period, the current account deficit has widened over the last two years, reaching 10.5 percent of GDP in 2012, the central bank said in its August inflation report.

The increase was due mainly to the investment cycle in the automobile and oil industries, which entailed higher imports of equipment and intermediate goods, and to high pre-election fiscal spending in the first half of 2012.

The expected improvement this year will be backed by improvements in the trade balance spurred by an increase in export.

In the first six months of 2013, the current account deficit was EUR 890.7 million, 53.5 percent lower year-on-year, mainly on account of a considerable increase in exports relative to imports.

A rise in exports was the most evident in the automobile industry, primarily owing to Fiat Serbia, but also to producers of car components. Low imports in the same period are due to the completion of investment cycles and low domestic demand.

Positive trends regarding a reduction in external disequilibrium are also confirmed by exports which exceeded the pre-crisis level by 36.4 percent in the first six months, while imports fell 9.8 percent below this level.

Provided exports and imports stay at the second quarter levels until the end of 2013, all other things being equal, the current account deficit could fall below six percent of GDP this year.

The current account deficit equalled 5.7 percent of GDP in the first half of the year. The improvements were due to favourable trade movements, lower interest outflows and higher remittances inflow compared to the same period last year.

At the annual level, the current account deficit will fall to around EUR 2.1 billion and the trade deficit around EUR 4.5 billion, which is a reduction of 33.4 percent and 17 percent respectively relative to last year.

In addition, the physical volume of exports is likely to accelerate to 11.5 percent, and that of imports to slow to 1.8 percent. Interest outflow will amount to around EUR 950 million this year, and current transfers inflow to around EUR 3.1 billion.

A reduction in the current account deficit is expected in the coming years as well, but at a more gradual pace.