The National Bank of Serbia’s review of its forecasting record shows that its GDP projections were more frequently below actual growth than above it during the post-pandemic period, while the largest inflation errors occurred during the global energy shock. The assessment, included in the NBS August Inflation Report, covers forecast deviations in GDP and inflation and examines the factors behind the largest differences between projections and realised outcomes.
For GDP, the central bank found that its short-term forecasts were generally cautious between 2021 and the end of 2024. Only Q3 2022 recorded a downside forecast error, when realised growth was weaker than the projection made one quarter earlier. In most other quarters during that period, actual economic growth exceeded the NBS forecast.
GDP forecasts weakened during 2025
The NBS characterises the pattern as evidence of a conservative approach to short-term GDP forecasting. The record provides context for its current projections of 3.2% growth in 2026 and 4.5% in 2027, which are above several external forecasts. The forecasting pattern changed in 2025, when realised GDP growth fell short of NBS projections. The report associates the misses with increased global uncertainty, the unresolved operating situation surrounding NIS, and domestic protests and blockades that affected investment and consumer confidence.
The direction changed again in 2026. Actual growth has so far exceeded forecasts, particularly during the second quarter, for which the NBS estimates annual GDP growth of 3.6%. The central bank’s assessment therefore identifies different sources for the forecast deviations across the period rather than a consistent tendency to overestimate or underestimate economic activity.
Inflation errors were concentrated around the energy shock
Inflation forecasting followed a different trajectory. The largest one-year-ahead deviations occurred during 2022 and early 2023, when realised inflation significantly exceeded NBS projections. The central bank attributes those errors to the surge in global energy prices, increases in other primary commodities and international cost pressures.
As those shocks subsided, forecasting accuracy improved. From mid-2023 through mid-2026, one-year-ahead inflation errors returned to a range broadly comparable with pre-pandemic experience. The NBS therefore links the exceptional inflation forecast deviations during the energy crisis primarily to external shocks rather than to persistent weaknesses in its forecasting models. Forecast accuracy remains important for monetary policy because decisions depend on the expected path of inflation and economic activity, rather than only on current readings.
Retail-margin measures also affected inflation forecasts
The report identifies government measures affecting retail margins as another source of forecast deviations.
Inflation was lower than projected in Q3 2025 after the government introduced restrictions on retail margins. In Q1 2026, inflation again came in below expectations because the price rebound following the expiry of the regulation was smaller than the NBS had anticipated. The central bank treats those deviations as specific policy-related effects rather than evidence of a systematic tendency to overestimate inflation.
The current inflation outlook contains additional uncertainty. The NBS expects headline inflation to rise from 1.9% in July to slightly above 4% from September, mainly because of base effects and energy costs. Food prices have nevertheless repeatedly surprised on the downside, with agricultural output proving stronger than previously expected.
Growth outlook remains exposed to external and domestic risks
The NBS sees potential for GDP outcomes to diverge from its central projections in both directions. Construction, agriculture and automotive production have performed better than earlier assumptions, while the economy remains exposed to risks involving Middle East energy markets, weak European demand and delays in project execution. The central bank’s alternative scenarios quantify part of that uncertainty. A severe energy shock could reduce 2027 GDP growth by 0.8 percentage points, materially lowering activity relative to the central forecast of 4.5%.
Conversely, faster normalisation of energy conditions could increase 2027 growth by 0.3 percentage points. The NBS’s review concludes that recent forecast deviations were largely associated with difficult-to-predict international developments rather than systematic shortcomings in its macroeconomic models. Following the exceptional 2022 shock, forecast accuracy gradually moved back towards pre-pandemic levels.
The historical record also provides context for the current growth outlook. During normal or favourable periods, the NBS has more often underestimated near-term real growth than overestimated it, while the inflation experience of 2022 demonstrated the limitations of models when global commodity markets move outside historical patterns. The 3.2% 2026 growth forecast therefore differs from a record dominated by persistent overestimation of economic activity. At the same time, the projected return of inflation to above 4% remains particularly sensitive to food and energy developments, which have generated some of the largest forecast deviations in recent years.
