Serbia's central bank raises 2018 growth forecast to 4 pct from 3.5 pct

BELGRADE, Aug 15 (Reuters) - The Serbian central bank raised its growth forecast for 2018 by half a percentage point to 4 percent on Wednesday, citing better-than-expected performance in construction, agriculture and investment.

In its inflation report for August, the bank said it expected that economic growth in 2019 would remain at a previously projected 3.5 percent, "partly due to high base effect and quicker growth in 2018."

"Better than expected performance of the construction industry and agriculture ... and investments ... have influenced us to make an upwards revision of GDP growth forecast for 2018 to 4 percent," the report said. The Balkan country's GDP grew 2 percent in 2017.

Serbia's gross domestic product grew 4.4 percent year-on-year in the second quarter of 2018, compared with 4.6 percent in the first quarter, the state Statistics Office said in a flash estimate last month.

In the report, bank said it expects economic reforms that started in 2014 as part of a now-expired 1.2 billion-euro ($1.36 billion) loan agreement with the International Monetary Fund would ensure economic growth of around 4 percent in the medium term.

The IMF, which currently maintains a non-financial arrangement with Serbia, estimated growth this year at 3.5 percent.

Last week, the bank left its benchmark rate at 3 percent, with July inflation up at 2.4 percent compared with 2.3 percent a month earlier, a strong currency and accelerating economic growth.

($1 = 0.8818 euros) (Reporting by Aleksandar Vasovic, editing by Larry King)

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