year is almost unchanged from august. chart 3 inflation projection chart 4 contributions to y - o - y inflation by component ( y - o - y rates, in % ) ( average y - o - y rates, in pp ) - 2 9 12 petroleum products administered prices fruit and vegetables non - food products and services food ( excl. fruit and vegetables ) average y - o - y inflation in quarter ( % ) source : nbs. 9 12 9 12 9 12 - 2 iii iv i ii iii iv i ii iii iv i ii iii iv i ii iii source : nbs. in the real sector, as positive dynamics in most production and service sectors extended into q3, we kept our 2024 gdp growth projection at 3. 8 %. this year ’ s gdp growth would probably be even higher were it not for the negative effects of the drought on agricultural output and electricity production in hydropower plants. let me remind you that, as a result of the regular major five - year revision, 2023 gdp growth was revised up, also to 3. 8 %. one of the text boxes looks into the details of the revision, as well as its effects on economic growth and the gdp shares of key macroeconomic indicators. 3 оf 9 chart 5 gdp growth projection chart 6 contributions to real gdp growth ( y - o - y rates, in % ) ( in pp ) change in inventories net exports government consumption gross fixed capital formation household consumption gdp ( in % ) - 2 - 2 iii iv source : nbs. i ii iii iv i ii iii iv i ii iii iv i ii iii - 4 2017 2018 2019 2020 2021 2022 2023 2024 * 2025 * 2026 * sources : sors and nbs calculation. * nbs estimate. as before, we expect economic activity to accelerate further in the next two years to the range of 4 – 5 %, with a central value of 4. 5 %. the composition of growth for this year changed slightly from august in favour of higher domestic demand growth. private consumption is expected to provide the largest positive impulse in the current and the coming years thanks to a rise in employment and wages, preserved consumer confidence and living standard of our citizens. serbia has been awarded investment grade rating as an additional confirmation that investment confidence has been preserved, so fixed investment will continue to provide robust support to gdp growth. this will also be propped up by the implementation of investments planned under the “ leap into the future – serbia expo

much as 189 %. of course, we still have a long way to go to achieve a fully market - determined exchange rate, like for example switzerland, but we are on the right track and we are getting there fast! we need a ) a still deeper forex market, b ) buyers and sellers who engage in forward trade and have abandoned the " euro costs what it costs " principle, c ) exchange dealers who trade exclusively with banks. moreover, after the first two weeks this year when, as we had expected, demand for foreign currency went up substantially, the nbs intervened in the interbank foreign exchange market session on one day only. do we need another proof that the exchange rate is freely formed? last year's inflation of 6. 5 % in serbia matches the level achieved by its neighbours. to illustrate, by applying the foreign exchange regime of the currency board, bulgaria recorded 6. 5 % also, bosnia 6. 0 %, while hungary reached 6. 5 % and romania 4. 9 %. building on this, and primarily on the low inflation recorded in the final quarter of 2006, in 2007 the national bank of serbia will target the lower band of the 4 - 8 % core inflation corridor, set already in august 2006. let us now note the role of the monetary policy. last year was a key year for serbia, as it was finally recognized that monetary policy represents a significant and powerful tool whose importance cannot be overstated! this is a very important point to make, especially in serbia, where i can in all honesty say this is the first time a modern and proper monetary policy has been pursued! i find it quite normal and understandable that a person may come up to me in the streets of cacak, novi sad or belgrade and ask me why the national bank of serbia has only one objective and why this objective is “ to achieve and maintain price stability ” and not “ to achieve growth and development, higher employment rates, exports, etc, ” or why it is that the nbs needs to sterilize excess money and how it finances this sterilization. but when such questions are raised by “ economists ” and “ experts ” – well, that is a cause for much concern! i get the feeling that these people are trying to ignore a very valuable experience from the 1970s and 1980s. many experts seem to have slept through the past 20 years – but the economic science has been developing regardless! experiences from that time were well summarized at a conference