jorgovanka tabakovic : overview of recent monetary and macroeconomic trends in serbia introductory speech by dr jorgovanka tabakovic, governor of the national bank of serbia, at the presentation of the inflation report – may 2016, belgrade, 24 may 2016. * * * ladies and gentlemen, welcome to the presentation of the may inflation report. as always, we will give you an overview of recent monetary and macroeconomic trends and our expectations for the period ahead. let me start and conclude my speech by discussing the same topical news! we have revised our gdp growth projection for 2016 from 1. 8 % upwards. we now expect that the serbian economy will end this year with a growth between 2. 3 % and 2. 5 %. allow me to underline that, given the current movements, it is far more likely that the year - end gdp growth rate will be at the upper bound of the projection range, i. e. at 2. 5 %. and it is not that we are being overly optimistic ; this projection is based on models, mathematics and indicators. if we compare the latest macroeconomic data with those presented in the february report, it is evident that the economic recovery of the republic of serbia has continued, and more importantly, that the growth is based on long - term sustainable foundations. and that is why the macroeconomic outlook for the period ahead has been revised upwards relative to the previous report. in the first three months of the year, fiscal deficit contracted by a quarter from the same period last year and equalled 1. 7 % of the estimated gdp, as compared to 2. 4 % in the same period a year earlier. the current account deficit of the balance of payments has more than halved compared to the corresponding period in 2015 – it equals 3. 3 % of the estimated gdp and remains fully covered by foreign direct investments. our fiscal outlook has improved in response to a sustainable rise in tax revenue, while the narrowing of the current account deficit has been driven by more favourable trends in external trade. last time we met at the presentation of the february report, we expressed no doubts as to the continuation of growth in exports and economic activity in the coming years. indeed, the growth has continued up, and has done so at an even faster pace than expected. export growth, measured in euro terms, was exceptionally strong – it came at 13. 4 % yеаr - on - year in the first quarter, and is without any doubt

inflationary pressures are low and macroeconomic fundamentals continue to improve, we have decided to keep the key policy rate unchanged at 4. 25 % for the time being because of persistent uncertainties in the international commodity and financial markets. on the other hand, movements in the domestic market – most notably the continuing and significant narrowing of internal and external imbalances, are cushioning the effects of external risks. what is certain in this time of uncertainties seeping in from the international environment is that the national bank of serbia shall, as so far, rise to all the challenges and that serbia will record higher and sustainable economic growth rates led by export - oriented investment. the improved macroeconomic indicators and a brighter outlook for the period ahead have also been recognised and acknowledged by the european commission, which revised up the economic growth projection for serbia, and by rating agencies, which raised serbia ’ s credit rating outlook. i now give the floor to ana ivkovic who will present to you in more detail our view of serbia ’ s macroeconomic prospects in the period ahead. thank you for your attention. bis central bankers ’ speeches