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WATCH LAUNCH OF THE REGIONAL ECONOMIC PROSPECTS LIVE
- EBRD revises up its Serbian growth forecast to 3.5 per cent for 2024
- Revisions based on strong growth in industrial production, real retail trade and tourism
- In 2025, growth is expected to reach 4 per cent
The European Bank for Reconstruction and Development (EBRD) has revised up its gross domestic product (GDP) growth forecast for Serbia to 3.5 per cent in 2024 from its previous forecast of 2.5 per cent in September 2023.
The upward revision for 2024 reflects strong growth in the first half of the year, driven by domestic demand and European Union (EU)-funded investment, in part as a result of falling inflation and relatively loose fiscal policy.
The Bank expects the Serbian economy to grow by 4 per cent in 2025.
The forecasts were published today as part of the Bank’s Regional Economic Prospects report, which foresees a slowdown in growth in the Western Balkans to 2.5 per cent in 2023 from 3.4 per cent in 2022, as persistently high inflation holds back domestic demand and subdues EU demand.
Short-term indicators for industrial production, real retail trade and tourism in the first two months of 2024 indicate strong growth for Serbia. Inflation is expected to return within the central bank’s target band by the end of the year amid continued tight monetary policy. The current account deficit continued to narrow in the first two months of the year, with an increase in exports of goods and services and a decrease in goods imports.
The third and final review under the Serbia’s International Monetary Fund Stand-by Arrangement has reached staff-level agreement and is pending Board approval, which would allow the government to access around €400 million. However, the authorities view the programme as precautionary, given the country’s strong accumulation of reserves and fiscal buffers, as well as a reduction in macroeconomic imbalances.
The acceleration of growth to 4 per cent in 2025 is expected to be underpinned by a pickup in household consumption and public investment as inflation subsides further and preparations for EXPO 2027 gather pace.
The EBRD is a leading institutional investor in Serbia and has invested more than €9 billion in the country through 354 projects to date, the majority in the private sector. The Bank’s focus in Serbia is on supporting private-sector competitiveness, the green energy transition and sustainable infrastructure.