Political developments have become a key variable for Serbia’s business environment after President Aleksandar Vučić indicated on 27 July that early parliamentary elections are expected in October or November, with a presidential election potentially taking place between December and February. The president has also reiterated his intention to resign, although the move had not been formally completed by the beginning of August.
Election timetable affects investment planning
The expected election cycle introduces additional uncertainty for the implementation of government infrastructure and investment programmes. Procurement activity, senior public-sector appointments and discretionary spending typically accelerate ahead of elections, while investors may postpone long-term commitments until the composition of the future administration and policy direction become clearer.
Fiscal position remains supported by credit ratings
Despite the political timetable, Serbia continues to maintain stronger fiscal indicators than many sovereign borrowers with comparable credit ratings. On 10 July, Fitch Ratings affirmed Serbia’s BB+ sovereign credit rating with a positive outlook, leaving the country one level below investment grade. S&P Global Ratings continues to assign Serbia a BBB- rating with a stable outlook.
The state budget includes RSD740 billion in capital expenditure, equivalent to 6.7% of GDP, while the government has maintained its commitment under its International Monetary Fund (IMF) programme to keep the fiscal deficit at or below 3% of GDP.
Economic indicators strengthen outlook amid ongoing risks
Recent data on GDP, retail trade and exports indicate continued economic momentum. At the same time, unresolved issues surrounding Naftna Industrija Srbije (NIS) ownership, drought-related energy costs, governance issues affecting major projects and the approaching political transition continue to influence market risk assessments.
Serbia enters the election period with accelerating domestic demand and an improving external trade balance, while manufacturing employment remains weaker, the number of listed companies has declined, and sections of the economy continue to face operational pressures linked to low water levels on the Danube River.
