IMF: Serbia's real GDP to grow 3 pct in 2025, 4 pct in 2026

WASHINGTON - The International Monetary Fund (IMF) announced on Monday its Executive Board had concluded the 2025 Article IV Consultation with the Republic of Serbia, completing the first review of Serbia’s performance under the Policy Coordination Instrument (PCI).

"Serbia’s macroeconomic performance remains resilient amid a challenging global environment. IMF staff projects real GDP growth at 3 pct in 2025, rising to 4 pct in 2026 and 4.5 pct in 2027. Headline inflation has returned to National Bank of Serbia’s target band (3 pct +/-1.5 pp), driven by declining energy prices and moderating core inflation. The monetary policy stance is appropriately restrictive," the IMF said in a statement.

"The authorities are maintaining fiscal discipline and implementing macro-critical structural reforms under the Policy Coordination Instrument, having completed the first review. While Serbia faces domestic and external uncertainties, it has built strong buffers to withstand potential shocks.

Reinvigorating reforms to improve the business environment and governance would help sustain Serbia’s strong growth over the medium term," it said.

"Despite increased public investment, the fiscal deficit remains under control due to strong revenue performance and prudent management of current spending. While the current account deficit has widened, reflecting higher imports supporting the public investment drive and weak external demand, international reserves remain ample.

Fiscal structural reforms are progressing, including in further strengthening public financial management and public investment management. Energy sector reforms are also advancing but more remains to be done to ensure financial sustainability and operational efficiency in state-owned energy enterprises. Reinvigorating reforms to strengthen the business environment and improve governance is important for supporting Serbia’s growth rates over the medium term.

Downside risks to the outlook are elevated. A global slowdown and further geoeconomic fragmentation could weigh on exports and foreign direct investment. Domestically, heightened political tensions could erode consumer and investor confidence. But Serbia is well-positioned to manage potential shocks — international reserves and government deposits are high, public debt is declining, and banks are well-capitalised and liquid," it also said.

“Serbia’s prudent macroeconomic policies and strong engagement with the IMF have delivered impressive results. Growth has been resilient, and fiscal and external buffers have strengthened. Reflecting these accomplishments, Serbia received its first-ever investment grade sovereign rating in 2024. Under the Policy Coordination Instrument (PCI), the Serbian authorities have continued their commitment to sound economic policies and structural reforms," said IMF First Deputy Managing Director Gita Gopinath.

"In light of easing inflation and heightened domestic and external challenges, the planned fiscal expansion focused on growth-enhancing investment, can help cushion the near-term slowdown while boosting medium-term growth. Fiscal policy anchored to the deficit target, which safeguards hard-earned fiscal credibility and contains pressures on current spending, is critical. As the current investment cycle winds down, gradual fiscal consolidation is needed to rebuild buffers against external shocks. Advancing fiscal structural reforms remains essential, particularly to strengthen public financial management, enhance governance and transparency in public investment management, and address emerging fiscal risks.

A restrictive monetary policy stance remains appropriate until disinflation is firmly sustained," Gopinath also said.