Serbia's economic landscape has undergone significant transformation over the past 12 years, positioning the country close to achieving an investment-grade rating, Jorgovanka Tabakovic, governor of the National Bank of Serbia (NBS), said on August 7.

Serbia's credit rating has been upgraded by two levels over the past decade and the country is now one step away from reaching an investment-grade rating, following recent improvements in its sovereign ratings by international agencies. This progress has been driven by robust macroeconomic fundamentals, including credible fiscal and exchange-rate policies and stronger-than-expected GDP growth.

"Today, Serbia is a country that has inflation comparable to the countries of Central Europe, a stable currency, financial system, and investment growth, but also a record level of foreign exchange reserves, as well as well-organised public finances, strong export growth, and a sustainable external position," Tabakovic said in a statement marking her 12 years in office.

Inflation, which stood at 12.2% at the end of 2012, was reduced to 2.2% within a year. While Serbia's average inflation rate from 2009 to 2013 was 4.9 percentage points higher than that of Central European countries, following 2013, Serbia's inflation rate aligned with its regional peers.

Tabakovic also pointed to improvements in the coverage of the average consumer basket by the average wage, which rose to 93.5% in the first five months of 2024, up from 65.9% in 2013. She emphasised that this improvement underscores the growth in living standards despite global economic challenges.

The stability of the Serbian dinar has been a key aspect of NBS policy, with the currency nominally strengthening by 1.3% over the past 12 years. "On the foreign exchange market, we bought almost €10bn, significantly boosting the country's foreign exchange reserves," Tabakovic said, adding that gross reserves at the end of July 2024 reached a historic high of €28.1bn, a 2.8-fold increase from July 2012.

Serbia has also seen a significant increase in gold reserves, which have tripled in quantity and grown five and a half times in value since August 2012. The share of gold in the country's foreign exchange reserves has doubled from 6% to 12%.

In terms of savings, Tabakovic reported record levels of both dinar and foreign currency savings, with the former increasing nine-fold since 2012 to nearly RSD165bn.

The NBS's efforts to maintain price stability have led to a period of low interest rates, facilitating more favourable borrowing conditions for businesses and citizens. "Interest rates on new dinar loans to the economy and the population are today about 9 and 10 percentage points lower than at the end of 2012," she said.

The share of non-performing loans in Serbia's banking sector has also dropped to below 3% from around 20% in 2012.

Tabakovic noted that Serbia's export of goods and services has nearly quadrupled, from €11.5bn in 2012 to €41bn in 2023. Additionally, foreign direct investment (FDI) inflows over the past 12 years have totalled €34bn, with a record €4.5bn billion in 2023.