S&P Global Ratings has maintained Serbia’s sovereign credit rating at the lowest investment-grade level while cutting its 2026 economic growth forecast to 3.2% from 3.3% amid higher political, fiscal and external risks.
The agency highlighted global energy prices, adverse weather, agricultural production, electricity generation and uncertainty surrounding NIS among the main risks to Serbia’s economy. Dependence on imported energy and prolonged drought conditions could weigh on economic activity through the remainder of the year.
Political uncertainty adds pressure to economic outlook
Political uncertainty ahead of elections has also become a factor in S&P’s assessment. The agency said prolonged instability or delays in forming a new government could affect consumer and investor confidence, postpone investment decisions and create uncertainty over the continuity of economic policies. S&P nevertheless expects Serbia to retain broad institutional stability and continue implementing its main fiscal and monetary policies. This assumption remains an important factor supporting the country’s investment-grade rating. The agency also pointed to Serbia’s exposure to energy-related risks, with uncertainty surrounding NIS adding to vulnerabilities alongside dependence on imported energy.
Higher deficit target limits fiscal flexibility
Serbia’s revised 2026 budget deficit target has been raised to 3.5% of GDP from 3.0%, despite stronger-than-expected budget performance during the first half of the year. According to S&P, fiscal performance could otherwise have allowed the government to bring the deficit down to between 2.0% and 2.5% of GDP. Instead, stronger revenue was partly allocated to a support package equivalent to close to 1% of GDP. The additional spending is providing short-term support for household consumption, but it also reduces the government’s fiscal capacity to absorb energy-related shocks, fund public investment or respond to weaker economic growth.
Rating supported by investment and macroeconomic management
Serbia’s investment-grade rating continues to be supported by moderate economic growth, foreign direct investment and improved macroeconomic management. At the same time, the fiscal position faces tighter constraints as election-related spending, energy exposure and domestic political uncertainty increase pressure on the government to restore fiscal discipline in 2027.
