important that fdi inflow fully covered the current account deficit for the ninth consecutive year, and even exceeded it multiple times in 2023. 1 of 9 later in the conference, we will present recent macroeconomic developments and our new projections in more detail. * * * as i highlighted at the start, inflation continued to slow in the final quarter of 2023 to 7. 6 % at year end. this is half its level a year ago and somewhat less than we anticipated in our november projection. inflation ’ s continued slowdown was propped up by the dissipation of cost - push pressures and the base effect from food prices, as well as by the effects of past monetary tightening which also supported core inflation ’ s decline to 6. 5 % y - o - y in december. chart 1 change in contribution of main cpi components to y - o - y inflation - relative to march 2023 * chart 2 inflation at the end of 2022 and 2023 ( in % ) ( in pp ) headline inflation - 1 core inflation - 2 - 3 - 4 - 5 - 6 - 7 - 8 15. 1 10. 1 unprocessed food processed food energy industrial products excluding food and energy services 7. 6 6. 5 - 9 apr. may june july aug. sources : sors and nbs calculation. * y - o - y inflation peaked in march. sept. oct. nov. dec. december 2022 december 2023 sources : sors and nbs calculation. inflation is expected to slow further in 2024. under our new projection, it will most probably retreat within the target band of 3±1. 5 % by mid - 2024, approach the target midpoint late in the year and hover around that level over the medium term. such inflation movements will mostly reflect the effects of past monetary tightening, softer global cost - push pressures, slowing imported inflation, still subdued external demand and the expected continued slide in inflation expectations. the new inflation projection is slightly lower than the november projection due to lower global prices of primary commodities and a faster decline in inflation expectations than we projected in november. it is important to note that not only medium - term but also short - term inflation expectations of the financial sector are now within the target band, and that corporate sector expectations are on a decline as well, confirming the credibility of our monetary policy. 2 of 9 chart 3 inflation projection chart 4 current inflation and one - year ahead inflation expectations ( y - o - y

the end of the year. in january it was somewhere around 50 % of gdp. the fiscal policy, in full coordination with the monetary policy, is providing an impetus to economic growth, without giving rise to inflationary pressures – the government ’ s rising capital expenditures contribute to the rise in investment, while higher pensions and wages in the public sector are conducive to sustainable growth in consumption. in accordance with our projections, the current account deficit in 2018 maintained its share in gdp at the level from 2017 ( 5. 2 % ), although imports increased on the back of higher investment and унутрашња употреба global oil price hike, and external demand slowed down. at the same time, for the fourth year in a row, the high net inflow of fdi, equalling eur 3. 2 bn, was more than sufficient to cover the current account deficit ( 143. 4 % coverage ). the path to achieving the above results was paved by the adopted economic policy measures that were appropriate and timely. their integral part is the monetary policy which maintained the price and financial stability and thereby contributed significantly to a considerable acceleration of economic growth and improved outlook for the coming period. it is particularly important to note that stability was ensured amid growing uncertainty in the international environment, which attests to the efficiency of monetary policy and measures undertaken by the national bank of serbia. another important result of these measures is the share of non - performing loans in total loans that was reduced to 5. 7 % at end - 2018, its new lowest level, thus confirming the further strengthening of banking sector stability. ladies and gentlemen, dear colleagues, since we last met at the presentation of the november inflation report, the nbs executive board has kept the key policy rate at 3. 0 %, its lowest level in the inflation targeting regime yet. in making such decision, the executive board has been guided by the assessment that inflation would continue to move within the target band over the projection horizon, thanks to, among other things, the effects of past monetary policy easing. caution is warranted by uncertainties in the international environment, notably movements in primary commodity prices, pace of monetary policy normalisation by leading central banks, and possible further rise in protectionism in international trade. having in mind that the key risks in the conduct of monetary policy stem from the international environment, the nbs will continue to carefully monitor and analyse trends in the international financial and