The Republic of Serbia January 2020 | Investor Presentation
Table of Contents 1. Serbia Overview & Highlights 2 2. Strong Macroeconomic Indicators 5 3. Robust External Position 9 4. Sound Fiscal Performance 14 5. Public Debt 16 6. Credible Monetary Policy and a Stable Banking Sector 23
1. Serbia Overview & Highlights
Firmly Positioned to Become a Strong, Competitive EU Member State Serbia is building a foundation for increased economic competitiveness and expansion on the back of significant reforms. Prudent macroeconomic targets and negotiations with Europe anchor economic and fiscal policy Serbia at a Glance Capital Belgrade Official Language Serbian Population (2011) 7.2 million Nominal GDP 1 42,855 (2018, EUR million) GDP per Capita 1 6,137 (2018, EUR) Form of Government Parliamentary Republic Upcoming Regular April / May 2020 Parliamentary Election Currency Serbian Dinar (RSD) FX EUR/RSD (January 8th, 2020) 117.54 Industry (25.4%); Trade, transport and tourism (20.2%); Agriculture (7.7%); ICT 3 (5.8%); Main Economic Sectors 2 Construction (5.4%); Other (35.5%) Moody’s: Ba3 (Positive); S&P:BB+ (Positive); Credit Ratings Fitch: BB+ (Stable) Latest Conference ended December 2019: 18 EU Accession Status of 35 chapters have been opened for Non-EU EU negotiations, 2 are provisionally closed Source: Statistical Office of the Republic of Serbia, National Bank of Serbia, European Council, Bloomberg Markets Note: 1 Recalculated by the Ministry of Finance using average exchange rate for 2018 (118.2716 RSD/EUR), 2 Measured as % of Total Gross Value Added (GVA) in 2018, 3 ICT – Information and Communication Technology 2
Key Investment Highlights Strong GDP growth of 4.4% 1 , strongest in 10 years, driven by robust investment and growing local demand and reflecting improving domestic and external confidence. GDP projection for 2019 revised upward from 3.5% to 4%. Integration with European Union remains key strategic objective; EU accession process, together with IMF and WB programmes, set the pace for comprehensive structural reforms Top investment destination for MNCs 2 ; Net FDI inflow reached EUR 3.1 billion in October 2019, and fully covered the CAD 3 for 4 th year in a row Fiscal surplus achieved in 2017, 2018 first time since 2005. Favourable trend continues in Q1-Q3 2019 with a surplus of 0.9% of GDP and 0.2% end of the year. Public debt to GDP ratio decreased by almost 20 percentage points since 2015; now down to 52% 4 of projected GDP and expected to fall further as growth continues and primary surplus is sustained Inflation kept firmly in check, moving around 2% on average in the last five years, supported by preserved relative exchange rate stability; NPL ratio reduced sharply 1 Full Year 2018, 2 MNC: Multinational Company, 3 CAD: Current Account Deficit, 4 December 2019 3
Overall Progress Recognized by Rating Agencies Serbia’s economic transformation has been recognised in improving credit ratings and outlooks. Fitch and S&P upgraded Serbia during 2019, Moody’s awarded a positive outlook in 2019 Fitch Moody's S&P Ba1 BB+ BB+ 6 6 6 Ba2 BB BB 5 5 5 BB- Ba3 BB- 4 4 4 B+ B1 B+ 3 3 3 B B 2 B2 2 2 B- B- 1 1 1 B3 0 0 0 2007 2009 2011 2013 2015 2017 2019 2007 2009 2011 2013 2015 2017 2019 2007 2009 2011 2013 2015 2017 2019 Sep 2019: Upgraded to BB+ from BB due to Fiscal Dec 2019: Upgraded to BB+ from BB due to Fiscal Sep 2019: Outlook changed to Positive from Stable consolidation and stable macroeconomic position, Outlook consolidation and stable macroeconomic position, representing improving debt metrics and robust Stable Outlook Positive economic growth outlook May 2019: Rating affirmed at BB, Outlook Stable Jun 2019: Rating affirmed at BB, Outlook Positive May 2019: Rating affirmed at Ba3, Outlook Stable Dec 2017: Upgraded to BB from BB- due to improving Dec 2018: Rating affirmed at BB, Outlook Positive Mar 2017: Upgraded to Ba3 from B1 due to fiscal public finances, Outlook Stable consolidation and structural reforms, Outlook Stable Dec 2017: Upgraded to BB from BB- due to fiscal over- Jun 2016 : Upgraded to BB- from B+ due to fiscal performance, Outlook Stable Mar 2016: Outlook changed to Positive from Stable consolidation and improving external balances, Outlook representing the government’s commitment to structural Dec 2016 : Outlook changed to Positive from Stable due Stable reforms and fiscal consolidation to the fiscal outturn exceeding expectations Jan 2016 : Outlook changed to Positive from Stable due to Jul 2013: Assigned a rating of B1, Outlook Stable Jan 2016 : Outlook changed to Stable from Negative the government’s fiscal consolidation plan and reflecting reduced risk to the country's fiscal consolidation improvement in external balances and structural reform program Jan 2014 : Downgraded to B+ from BB- due to Aug 2012: Downgraded to BB- from BB due to risks to deteriorating public finances, Outlook Stable monetary stability amidst external pressures, Outlook Negative Mar 2012: Upgraded to BB from BB- due to reform momentum and political stability, Outlook Stable Next publication: March 2020 Next publication: Јune 2020 Next publication: June 2020 Source: S&P, Fitch, Moody’s Positive Outlook Negative Outlook 4
2. Strong Macroeconomic Indicators
Structural Reforms Drive Sustainable Growth Implementation of wide-ranging structural reforms, improvement in the domestic investment climate and EU accession process have created a foundation for healthy, long-term growth Regulatory convergence fosters institutional strengthening The Global Competitiveness Index Serbia continues to harmonize its laws and regulatory practices 1 0.9 with EU standards, creating a more effective and efficient public 0.8 sector that facilitates private investment and delivers quality 0.7 65/138 72/141 0.6 70/140 services to businesses and citizens 0.5 90/144 94/144 94/148 0.4 As Serbia’s institutions become stronger, their fiscal, monetary 0.3 0.2 and policymaking credibility deepens. They are better 0.1 positioned to promote inclusive economic growth and prosperity 0 2014 2015 2016 2017 2018 2019 Rank Source: Global Competitiveness Report Improvement across Key Governance Indicators Forty five places gain in the World Bank Doing Business Index 1 60 0.9 43 44 47 48 59 0.8 50 0.7 91 93 0.6 0.5 40 0.4 Government Effectiveness 0.3 30 Regulatory Quality 0.2 Political Stability and Absence of Violence/Terrorism 0.1 20 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2019 2020 Rank on a scale form 0 to 100 Rank of 189 Source: World Bank Doing Business Index 2019 Source: World Bank Worldwide Governance Indictors Note: 2020 rank out of 190 5
Strong Macroeconomic Indicators Serbia’s strong GDP growth of 4.4% in 2018 reflects improving domestic and external confidence. In Q3 2019 GDP advanced quite above H1(from 2.8% to 4.8% y/y), driven by all key sectors, with construction and fixed investment beating expectations. Sustainable economic growth 1 .. ..one of the highest among its regional peers (Real GDP Growth 2018) 59.98 5% 0.06 4% 49.98 0.05 4.0% 4.9% 4.0% 3% 4.4% 4.4% 39.98 0.04 4.1% 2% 3.3% 29.98 0.03 2.0% 3.1% 1.8% 1% 2.6% 19.98 0.02 0% (1.6%) 9.98 0.01 -1% 35.5 35.7 36.7 39.2 42.9 45.9 49.0 -0.03 -2% 0 2014 2015 2016 2017 2018 2019F 2020F Serbia Croatia Bulgaria Romania Hungary Nominal GDP (EUR Billion) Real GDP Growth (%) Source: Office of Statistics Source: Office of Statistics; Eurostat Supported by strong consumption.. ..and solid private investment (Contributions to the real GDP growth rate) 16.1% 14.9% 2.2% 2.2% 14.1% 13.9% 13.6% 1.4% 0.9% 3.9% 0.6% 3.1% 2.8% 0.5% 2.7% 2.3% 0.4% 0.2% 0.2% 2014 2015 2016 2017 2018 (0.1%) (0.4%) (0.7%) 2014 2015 2016 2017 2018 Q1-Q2 2019 Private Investment (% GDP) Government Investment (% GDP) Household Consumption Government Consumption Source: Ministry of Finance Source: National Bank of Serbia Note: GVA – Gross Value Added 1 2019F GDP converted from the projected Nominal GDP of RSD 5,416.8 using the exchange rate 118.00 RSD/EUR 6
Recommend
More recommend
