Annual inflation rate in 2014 "to be around 4 percent"

Annual inflation rate in 2014 "to be around 4 percent"

Presenting the report, Branko Hinić, general manager of the NBS Directorate for Economic Research and Statistics, said that positive tendencies have continued, as inflation is running low, and economic growth in 2013, led by net exports, has exceeded our expectations.

The surprisingly steep fall in prices of unprocessed food, notably fruit, has pushed y-o-y inflation in the fourth quarter of 2013 below the lower bound of the target tolerance band, Hinić said.

The NBS expects year-on-year inflation in the on-going quarter to fall back within the bounds of the target tolerance band of 4 percent plus or minus 1.5 percentage points and continue to move within this range.

As agricultural production performed much better than anticipated, gross domestic product (GDP) growth in 2013 amounted to 2.4 percent, said Hinić.

“It is precisely because of the higher last year’s base for agricultural production that we have trimmed down our growth forecast for this year. According to the new projection, GDP should grow by around one percent in 2014 and by around two percent in 2015,” Hinić said.

The National Bank of Serbia strongly endorses the government’s determination to implement fiscal consolidation measures and structural reforms and believes an arrangement with the IMF would be a positive signal to investors to come to Serbia.

Branko Hinić told reporters that the government's commitment to reforms was important because of the significance of sustainable public finances for the country's macroeconomic stability, especially during instability on the international financial market.

"Consistent implementation of these measures would boost the domestic economy’s resilience to external shocks," he said presenting the NBS February report on inflation.

An arrangement with the IMF would help instill investors with a positive image of Serbia as an investment target, he stated.

A mission from the IMF is expected in Serbia at the end of February.