Serbia’s GDP grew by 2 percent year-on-year in the first quarter of 2025, placing the country in the middle range among European economies. However, on a quarter-on-quarter basis, Serbia experienced a contraction of 0.6 percent, joining eight European countries that recorded negative growth in this period.
In comparison to other countries, Serbia outperformed major EU economies like Germany, which had zero growth, France with 0.6 percent, and Italy with 0.7 percent. However, it lagged behind several others, including Ireland with an extraordinary 21.1 percent growth, as well as Poland, Croatia, Bulgaria, and others with growth between 2.8 and 3.7 percent.
The key challenge for Serbia remains external demand, particularly from its largest trade partners, Germany and Italy. The slow recovery in the eurozone continues to weigh heavily on Serbia’s economic momentum. Analysts note that 60 to 70 percent of Serbia’s trade is linked to the European Union, making the country’s performance highly dependent on developments in those markets.
Domestically, there are a few potential sources of economic acceleration. One is the planned start of production of the Fiat Grande Panda model in Kragujevac, with a target of 100,000 units this year. If realized, this could significantly contribute to GDP. Another area of potential improvement is the construction sector, which was in decline year-on-year during the first quarter. Analysts believe that if construction projects are revived and implemented efficiently, they could provide a much-needed boost.
Retail trade also stagnated at the start of the year, but this is attributed more to postponed consumption than to a lack of disposable income. Analysts suggest that consumer caution was heightened due to political protests and instability. With wage growth and credit to households remaining strong, a rebound in consumer spending is expected in the coming months.
On the downside, agriculture is unlikely to contribute positively this year due to poor weather conditions, including frost and hail that damaged fruit and vegetable yields. Additionally, there have been no major new investment projects apart from Fiat that could significantly drive GDP.
Economic experts are cautiously optimistic. Milorad Filipović from the Faculty of Economics in Belgrade stated that Serbia could still achieve high growth levels by the end of the year, but much depends on the performance of the European market. He also noted that the European auto industry is facing major challenges, which could affect Serbia’s automotive exports. Ivan Nikolić from the Institute of Social Sciences echoed this view, highlighting that the construction sector and delayed household consumption offer potential for recovery, while external conditions remain the primary risk.
In the broader European context, Ireland’s 21 percent growth stands out as an anomaly, driven by favorable tax policies and strong activity from multinational tech and pharmaceutical companies. This outlier performance skews average EU growth figures, masking deeper stagnation in many core eurozone countries.
Overall, Serbia’s economic trajectory in 2025 will depend heavily on both the global environment and its ability to activate domestic drivers of growth. Without a stronger rebound in the EU, Serbia’s growth may remain modest despite internal efforts.
