IMF: Serbia's economy projected to grow by 2.1 pct in 2025, 3 pct in 2026

BELGRADE - The International Monetary Fund (IMF) said on Thursday Serbia's economic growth was projected at 2.1 pct in 2025 and 3 pct in 2026.

"Economic activity has slowed amid both external and domestic challenges. Growth in 2025 is projected at 2.1 pct, reflecting weaker public investment, lower FDI inflows, and weaker consumption. After temporarily rising above the upper bound of the NBS’s tolerance band due to higher food prices from poor harvests, headline inflation eased to 2.9 pct in September, reflecting price and margin controls on food and household essentials," the IMF said in an end-of-mission statement after IMF staff reached a staff-level agreement with Serbian authorities on a second review under the IMF's Policy Coordination Instrument.

"Growth is projected to recover to 3 pct in 2026 on continued gains in household disposable income, supportive credit conditions, new manufacturing export capacities, and the resolution of NIS-related energy supply uncertainty. Inflation in 2026 is likely to rise moderately. The current account deficit is projected to widen to around 6 pct of GDP before moderating, and foreign exchange reserves are expected to remain at comfortable levels.

Risks to the outlook are on the downside. A protracted resolution of NIS and domestic political tensions could weaken economic activity. The risks are cushioned by significant fiscal and external buffers, including high foreign exchange reserves and government deposits, a resilient banking sector and moderate public debt.

Maintaining prudent macroeconomic policy is essential to safeguarding credibility while preserving policy space to respond to shocks. The 3.0 pct of GDP ceiling on fiscal deficits - striking an appropriate balance between current spending needs and investments - is a fundamental policy anchor.

The authorities are strengthening public investment management, with further gains achievable through enhanced cost-benefit analyses, fiscal risk assessments, and stronger procurement practices. The authorities are also committed to improving fiscal transparency and are making good progress toward completing Serbia’s first tax expenditure report, conducting an actuarial study of the pension system, and publishing additional fiscal data related to mineral resources, state-owned enterprises (SOEs), and municipal finances.

Energy sector reforms are progressing, but further efforts are needed to secure the financial sustainability and operational efficiency of energy SOEs. Serbia is pursuing a range of critical energy investments, and given the sector’s significant financing needs, prioritizing the most cost-effective projects will be key to strengthening both economic performance and energy security.

The current monetary policy stance remains appropriate and continues to underpin Serbia’s macroeconomic stability, including by looking through temporary price fluctuations. As the effects of price and margin controls are expected to dissipate over time, the authorities should stay vigilant to potential upside inflation risks," it said.

"The mission welcomed the authorities’ intention to phase out the price and margin controls as planned, by end-February. The authorities are committed to resolving the sanctions on NIS in a way that ensures uninterrupted petroleum supply in Serbia," the IMF also said.