EBRD forecasts accelerating growth for Serbia in 2024

• EBRD expects Serbian growth to be faster than 2023
• Projections based on strong growth industrial production, real retail trade and tourism
• In 2025, growth is expected to reach 4 per cent

The European Bank for Reconstruction and Development (EBRD) has published the Regional Economic Prospects and the GDP growth for Serbia is expected to reach 3.8 per cent in 2024.

The Western Balkans will see growth accelerate from 2.5 per cent in 2023 to 3.4 per cent in 2024 and 3.7 per cent in 2025, driven by strong tourism inflows in Albania, sustained consumption growth in Montenegro, as well as strong investment in Serbia.

After 2.5 per cent GDP growth in 2022 and 2023, the Serbian economy picked up significantly to 4.3 per cent year on year in the first half of 2024. The acceleration was driven by services, predominantly trade, tourism and catering, and construction.

The current account deficit doubled compared with the first half of 2023, reaching over €1.2 billion (3.3 per cent of GDP), driven by high imports, dividend outflows and lower incoming government transfers from abroad. Net FDI inflows remained at the same level as in the first half of 2023 (at €2 billion). Inflation has stayed elevated compared with the rest of the region, at 4.3 per cent in July 2024, driven by core inflation. However, the policy rate was cut twice in recent months from its peak at 6.5 per cent to 6 per cent in July 2024. The fiscal stance remained expansionary, with a further rise in public wages and pensions announced for this year.

Growth is expected to reach 3.8 per cent in 2024 on the back of strong performance in the first half of 2024 as well as expansionary fiscal and monetary policy, boosting consumption and capital investment.

In 2025, growth is forecast to accelerate to 4 per cent but tight labour markets, geopolitical instability and adverse weather conditions constitute downside risks. Successful implementation of reforms in state-owned enterprise governance as well as carefully planned and executed public investments may boost growth.

The EBRD is a leading institutional investor in Serbia and has now invested more than €9 billion through 362 projects, of which the majority supported the private sector. The Bank's focus in the country is on supporting private-sector competitiveness, green energy transition and sustainable infrastructure.