UPDATE 1-Serbia trade deficit narrows 23.7 pct in first quarter

Tue Apr 30, 2013 7:41am EDT

* March industrial production up 0.8 pct year-on-year

* Foreign trade deficit down 23.7 pct in Q1

* Serbia targeting 2 pct growth in GDP in 2013 (Adds trade deficit, production, quote)

BELGRADE, April 30 (Reuters) - Serbia's economy grew 1.9 percent in the first quarter and its trade deficit shrank 23.7 percent, helped by its joint venture with Italy's carmaker Fiat , as well as agriculture and the oil and gas industry.

The European Union candidate state is targeting growth of 2 percent this year after slipping into recession in 2012 due to the fallout from the crisis in the euro zone, Serbia's main trade partner and source of investment.

Industrial production rose 0.8 percent in March year-on-year and 5.2 percent for the period January-March, according to a flash estimate by the state statistics office on Tuesday.

The country's foreign trade deficit narrowed 23.7 percent at 1.27 billion euros.

The data provides a boost for Serbia's government on the back of a landmark accord on April 19 with the country's former Kosovo province, which won Belgrade a preliminary green light to start membership talks with the European Union later this year.

The 27-nation bloc will take a final decision on accession talks in late June. The process is expected to drive reform in the country of 7.3 million people and help lure investors.

"The good news flow continues on Serbia," said Tim Ash, head of emerging markets research at Standard Bank.

"Low base period effects were a key factor herein, but this also shows the impact of the ramping up of production at the Fiat car plant", he said in a note. "Increased production from the Nis refinery is also helping, as the facility was being renovated for much of last year."

He said the 2-percent GDP growth target "seems pretty realistic".

The statistics office said it would provide more details on the data on June 28. (Writing by Matt Robinson; Editing by Louise Heavens)

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