EC: Serbian economic growth to be 2.2 pct in 2025 and accelerate to 3.3 pct in 2026, 4.2 pct in 2027

BRUSSELS - Serbian economic growth will amount to 2.2 pct in 2025 and accelerate to 3.3 pct in 2026 and 4.2 pct in 2027, spurred by major government investment as part of the Leap Into The Future - Serbia 2027 plan and EXPO 2027-related projects, according to the European Commission's European Economic Forecast for autumn 2025, released on Monday.

"Economic growth slowed from about 4 pct in 2024 to about 2 pct y-o-y in the first half of 2025. Ongoing domestic political unrest and student-led protests, together with global uncertainties over tariffs and trade, has impacted consumer and business confidence and FDI inflows, which have halved compared to 2024," the report said.

"Household consumption rose by 2.4 pct y-o-y in the first half of 2025, significantly less than the high wage and pension growth. Investment declined by 2.5 pct y-o-y, notably due to weaker construction activity, although from a high level after several years of robust growth. A strong negative effect on growth came from a 10.5 pct surge in imports outpacing a 6.5 pct growth in exports.

As a result, the current account deficit is expected to widen to 5.3 pct of GDP in 2025, up from 4.7 pct in 2024. Short-term indicators for construction activity, industrial production and retail trade suggest continued modest economic activity for the rest of 2025. The economic sentiment indicator improved over August and September, but was still below its long-term average.

Overall, annual GDP growth is forecast to slow to 2.2 pct in 2025, before accelerating in 2026 to 3.3 pct and further strengthening in 2027 to 4.2 pct as major public works boost investment amid the ‘Leap to the Future – Serbia 2027’ programme and the specialised EXPO 2027, culminating in expected strong tourist inflows in 2027.

Household consumption is projected to eventually regain momentum as a result of solid wage growth as well as the adopted strong increases in both pensions (by 12 pct from December 2025) and minimum wages (cumulatively by 20 pct in 2026). In light of strong domestic demand, imports are projected to outpace exports in 2026 and to a smaller extent also in 2027, when EXPO-related tourist inflows are expected to boost services exports.

Downside risks to the outlook prevail, as the political instability has already cut FDI inflows and the business environment faces uncertainties, also from the government’s significant intervention into the retail market, capping retail margins at 20 pct for a period of six months from September 2025 for a large number of food categories and some basic goods. In addition, in October 2025, the United States enforced sanctions on Serbia’s oil company NIS, majority-owned by Russia’s Gazprom, which supplies around 80 pct of the country’s fuel. This is not included in the current forecast, as the resolution of the sanctions is highly uncertain, but it could have significant economic consequences in the coming months should oil reserves run out," it also said.