At the beginning of 2025, Serbia’s macroeconomic trends suggest a weaker performance compared to 2024. Milojko Arsić, a professor at the Faculty of Economics in Belgrade, forecasted that the country’s economic growth will fall below the planned 4.2 percent, likely to be under four percent.
During the presentation of the “Quarterly Monitor” newsletter on economic trends and policies in Serbia, Arsić pointed out that key economic indicators such as industrial production, retail trade turnover, exports, and tax collection have slowed in January compared to the previous year. Additionally, the number of building permits issued has decreased.
In 2024, Serbia recorded a relatively strong economic growth rate of 3.9 percent, which ranked among the highest in Europe. Only Malta and Albania posted higher growth rates. Arsić explained that domestic demand was the main driver of this growth, contributing to both internal and external imbalances. Inflation in 2024 averaged 4.6 percent, placing Serbia among the European countries with the highest price increases. The current account deficit deepened significantly, reaching 6.3 percent of GDP, a substantial rise from 2023. Despite this, foreign direct investments and loans contributed to a significant increase in Serbia’s foreign exchange reserves.
On the labor market, 2024 showed positive trends with increases in employment, real wages and productivity, although rising unit labor costs raised concerns about the sustainability of these improvements.
Arsić emphasized that while the 3.9 percent GDP growth in 2024 was a strong result, especially compared to the EU average of 1 percent and 2 percent in comparable Central and Eastern European countries, the outlook for 2025 remains uncertain. Internal and external factors affecting economic growth have become more complex, leading to growing uncertainty regarding Serbia’s economic future.
Currently, there is limited data available for 2025, and it will take more time to assess how much the GDP growth will fall short of expectations. Additionally, the resolution of Serbia’s political crisis and its impact on the economy, as well as global economic and political developments, remain crucial to understanding the direction of the country’s growth.
Arsić noted that fiscal policy in 2025 will face significant challenges, as the budget projects an increase in the fiscal deficit to 3 percent of GDP, with risks that the deficit could be even higher. Budget revenues are expected to decline due to the slowing of GDP growth, while expenditures will rise due to additional allocations for education, health, and housing subsidies for young people.
Arsić stressed that for short-term economic growth, it is vital for the political crisis in Serbia to be resolved promptly. For long-term growth, however, the resolution must focus on reducing corruption, strengthening the rule of law, and improving the efficiency of the state administration.
