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S&P raises Serbia's outlook to positive due to faster economic growth

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S&P raises Serbia's outlook to positive due to faster economic growth

S&P Global Ratings revised its ratings outlook on Serbia to positive from stable, citing the country's strong economic growth that is expected to continue through 2021.

The rating agency projected Serbia's real GDP to expand 4.2% or slightly higher in 2018, the fastest pace in 10 years, driven by growth in exports and investments, and sustainable private consumption amid improving labor market conditions.

Economic growth should proceed at an average annual pace of 3% from 2019 to 2021, according to S&P, which affirmed the country's long- and short-term foreign and local currency sovereign credit ratings at BB/B.

A new policy-coordination arrangement between the Serbian government and the International Monetary Fund, which could unlock further growth-boosting reforms, "should help anchor economic and fiscal stability," S&P said.

The revised outlook also reflects steps the National Bank of Serbia has taken to make its monetary policy more credible and effective.

"[I]n our view, inflation expectations are now well-anchored, the exchange rate regime remains relatively flexible, and the largely foreign-owned banking system has been put on stronger financial footing," S&P said.

Serbia's ratings could be upgraded in the next 12 months if its strong economic growth and decline in public debt continue along with contained external imbalances, according to S&P.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found here.