Fiscal policy in Serbia should remain within the framework agreed upon with the IMF, keeping the fiscal deficit below three percent, according to the analysis in the “Quarterly Monitor.”
Serbia’s economy is expected to grow by around three percent this year, outperforming the average growth rates of the European Union and Central and Eastern European (CEE) countries. Inflation is projected to continue declining in the second half of the year.
Professor Milojko Arsić, editor-in-chief of the “Quarterly Monitor,” emphasized the importance of Serbia maintaining balanced economic relations globally, avoiding over-reliance on any specific group of countries. Regarding China, Serbia faces a significant trade deficit and should negotiate better terms for exporting its products. He noted that opportunities were missed during free trade agreement negotiations, where asymmetric terms favorable to Serbia should have been sought.
For sustainable long-term growth, Serbia must improve institutional quality, adopt better laws with consistent enforcement, and enhance education, research, and development to build a technologically advanced production base.
Concerning the upcoming Expo, Arsić noted it will positively impact economic growth and tourism but questioned its long-term profitability due to challenges in repurposing facilities after the event. He also observed that focusing on the Expo might delay other important projects.
The analysis highlighted that some projects are implemented without proper economic evaluation or social justification, and stressed the need to improve the efficiency of public investments.
The political crisis in Serbia has negatively affected short-term economic activity, while its long-term impact depends on how the crisis is resolved.
Key economic data for early 2025 include:
- Foreign capital inflows of €450 million in Q1.
- Decline in foreign direct investment due to European stagnation, geopolitical tensions, rising business costs, and domestic political instability.
- Export growth of €759 million in Q1.
- Current account deficit at 3.4% of GDP.
- Faster-than-planned growth in income tax and contributions.
- Public debt at €39.1 billion (46.8% of GDP) at the end of Q1, reduced by €350 million in April.
Economic growth slowed at the beginning of 2025 due to the political crisis, structural issues in the domestic economy, and stagnation in the EU. Employment and unemployment rates remained stagnant. Although labor productivity increased by 1.7%, growth remains slower than real wages.
