A prolonged disruption in global energy markets could raise Serbia’s average inflation by 1.2 percentage points in 2027 and reduce economic growth by 0.8 percentage points, according to a stress scenario prepared by the National Bank of Serbia.
The central bank’s assessment assumes a renewed escalation of the Middle East conflict, a prolonged disruption in the Strait of Hormuz and further reductions in Red Sea shipping. Under the scenario, higher energy costs would affect Serbia through fuel prices, imported goods, financing conditions and weaker household and corporate demand. The baseline scenario assumes geopolitical tensions gradually ease, the Strait of Hormuz reopens and energy prices return toward levels indicated by market futures and IMF assumptions.
Oil and gas assumptions diverge sharply from baseline
Under the adverse scenario, oil prices would rise toward $120 per barrel, remain around that level through the first quarter of 2027 and then decline gradually to approximately $112 by the end of 2027. Average oil prices would reach about $105 per barrel in 2026 and $115 in 2027, compared with approximately $86 and $77 in the NBS baseline.
European natural-gas prices would also rise substantially. The alternative scenario assumes average prices of about €681 per 1,000 cubic metres in 2026 and €786 in 2027, compared with baseline assumptions of €515 and €442, respectively. Serbia would face the shock as a net energy importer. Its energy trade position had already weakened in 2026, with the energy balance deteriorating by approximately €421 million between March and June compared with the same period a year earlier.
Energy costs would spread through the wider economy
The first transmission channel would be direct, as more expensive crude raises domestic prices for petroleum products. The impact would then spread through fuel, transport and electricity costs into industrial production, food manufacturing and distribution. The NBS also identifies container shipping and fertiliser prices as areas vulnerable to a prolonged geopolitical disruption.
Imported inflation would provide another source of pressure. In the adverse scenario, euro-area inflation would rise to 3.7% in 2026 and 4.2% in 2027, compared with 2.9% and 2.3% under the baseline. Serbian companies importing equipment, intermediate goods and services would consequently face higher costs beyond the direct impact of energy prices. The financial channel would add further pressure. Higher global inflation could lead major central banks to maintain restrictive monetary policies for longer or tighten policy further, raising risk premia and financing costs and potentially diverting capital from emerging markets.
Higher prices would also reduce household real incomes, while geopolitical uncertainty could delay corporate investment. Domestic demand would therefore weaken at the same time as slower European activity reduces external demand.
NBS quantifies the impact on growth and inflation
The NBS estimates that the combined effects would increase Serbia’s average inflation by 0.4 percentage points in 2026 and 1.2 percentage points in 2027 relative to the baseline. GDP growth would be reduced by 0.2 percentage points in 2026 and 0.8 percentage points in 2027. Applied to the NBS central forecast, the adverse scenario would reduce projected 2027 growth from 4.5% to approximately 3.7% while pushing average inflation materially above the current central projection.
The timing would be significant because 2027 is also when Serbia expects Expo-related activity and its broader capital programme to reach a peak. A major energy shock would therefore coincide with increased construction, services activity and investment, while simultaneously raising the cost of imported materials and financing.
Capital-market financing would face higher costs
Global financial conditions would also matter as Serbia and domestic companies continue to access international capital markets. The sovereign issued approximately €3 billion equivalent of Eurobonds in April 2026, while corporate issuers raised around €1.95 billion equivalent in May. An increase in global risk premia would raise refinancing costs for future sovereign and corporate transactions.
Serbia’s banking system provides some financial buffers. The gross NPL ratio stands at 2.0%, foreign-exchange reserves are high and the share of lending denominated in dinars has increased. The NBS nevertheless expects an energy shock to affect banks primarily through household purchasing power, corporate profitability and investment demand rather than through an immediate deterioration in asset quality.
Faster de-escalation would improve the outlook
The central bank also models a more favourable scenario in which geopolitical tensions ease faster. Under that assumption, oil could fall to approximately $73 per barrel by the end of 2026 and $67 by the end of 2027. Serbian inflation would then be 0.2 percentage points lower in 2026 and 0.3 percentage points lower in 2027 than in the baseline. GDP growth would be approximately 0.1 percentage point higher in 2026 and 0.3 percentage points higher in 2027.
The scenarios place energy markets at the centre of the 2027 outlook. The NBS baseline combines 4.5% growth, inflation within the target range and an improving current account as service exports strengthen. The adverse scenario shows that a renewed disruption in global energy markets could remove a significant part of the expected acceleration just as Serbia’s investment, import and financing requirements increase.
