The National Bank of Serbia has attached unusually precise numbers to the country’s geopolitical vulnerability. A renewed and prolonged Middle East energy shock could push average Serbian inflation 1.2 percentage points above the baseline in 2027 while reducing GDP growth by 0.8 percentage points.
That estimate turns geopolitical risk from an abstract concern into a quantifiable macroeconomic stress scenario.
The NBS’s baseline assumes that geopolitical tensions gradually ease, the Strait of Hormuz reopens and energy prices fall back in line with market futures and the IMF’s assumptions. But the bank also models a pessimistic case in which the conflict persists, Hormuz remains disrupted for longer and Red Sea shipping is further reduced.
In that scenario, oil prices would climb back towards $120 per barrel, remain around that level through the first quarter of 2027 and decline only gradually to roughly $112 by the end of that year. Average oil prices would be around $105 in 2026 and $115 in 2027, compared with approximately $86 and $77 in the baseline.
European gas prices would also be dramatically higher. The NBS alternative assumptions put average gas prices at around €681 per 1,000 cubic metres in 2026 and €786 in 2027, versus €515 and €442 in the baseline.
The transmission into Serbia would occur through several channels at once.
The first is direct. More expensive crude raises domestic petroleum-product prices. Serbia is a net energy importer, and its energy trade balance had already deteriorated materially in the first half of 2026. From March through June, the energy balance worsened by around €421mn compared with a year earlier.
The second channel is indirect. Higher fuel, transport and electricity-related costs move into industrial goods, food production and distribution. The NBS notes that container shipping and fertiliser prices would also be vulnerable to a prolonged conflict.
The third channel operates through imported inflation. Under the pessimistic scenario, euro-area inflation would increase to 3.7% in 2026 and 4.2% in 2027, compared with 2.9% and 2.3% in the baseline. Serbian companies importing equipment, intermediate goods and services would therefore face higher prices even beyond the direct energy effect.
The fourth channel is financial. Higher global inflation would encourage leading central banks to tighten monetary policy further or keep rates high for longer. Risk premia would rise, financing conditions would become more restrictive and capital could move away from emerging economies.
The fifth is confidence. Higher prices reduce real household income, while geopolitical uncertainty can cause businesses to delay investment. These channels weaken domestic demand at the same time that external demand from Europe slows.
The NBS estimates that the combined effect would raise average Serbian inflation by 0.4 percentage points in 2026 and 1.2 points in 2027 relative to the baseline. GDP growth would be 0.2 points lower in 2026 and 0.8 points lower in 2027.
Applied to the central forecast, that would turn the expected 4.5% growth rate in 2027 into roughly 3.7%, while average inflation would move materially higher than the current central projection.
The asymmetry matters because 2027 is also the year Serbia expects its Expo-related activity and capital programme to peak. A severe energy shock would therefore collide directly with the planned acceleration in construction, services and investment.
Higher global rates would make financing more expensive just as government and corporate borrowers are active in international capital markets. Serbia issued approximately €3bn equivalent of sovereign Eurobonds in April 2026, while corporate issuers raised roughly €1.95bn equivalent in May. A widening of risk premia would increase refinancing costs for future transactions.
The domestic banking sector provides some protection. NPLs are only 2.0%, reserves are high and the dinarisation of lending has increased. But a global energy shock would reach banks indirectly through household purchasing power, corporate margins and investment demand rather than through immediate asset-quality deterioration.
The NBS also presents an optimistic scenario, illustrating the size of the other side of the distribution. A faster geopolitical de-escalation could push oil to around $73 per barrel by end-2026 and $67 by end-2027. Serbian inflation would then be 0.2 points lower in 2026 and 0.3 points lower in 2027 than in the baseline, while GDP growth would be around 0.1 and 0.3 points higher.
This range is useful for investors because it frames the 2027 Serbian outlook as conditional on energy markets rather than purely domestic execution.
The central scenario remains relatively favourable: growth accelerates to 4.5%, inflation remains within the target band and the current account improves with stronger service exports. But the pessimistic case shows that geopolitics can erase a significant portion of that acceleration.
The largest macro risk to Serbia’s Expo-year economy is therefore not necessarily excessive domestic demand. It is another external energy shock arriving at the moment when investment, imports and financing requirements are highest.
