The American tariffs introduced by President Donald Trump are expected to further slow down private investments in Serbia, which have already been declining for years due to state policies. Currently, investments have nearly halted as businesses anticipate worsening economic conditions, according to the FINANCE TOP 2024/25 report by Business and Finance magazine.
There is growing demand for Serbia to shift economic policy towards domestic capital sources and adopt a new growth model, supported by a stimulating tax reform. However, experts note that opportunities for deeper tax reform were missed in previous years when foreign investment and economic growth were stronger. It remains uncertain whether the Ministry of Finance will pursue tax policy changes, such as reinstating tax credits for investment in equipment.
Market participants expect the US tariffs will indirectly impact Serbia’s economy by slowing growth, which will reduce credit activity as both citizens and businesses become more cautious in times of crisis. Bankers warn that weaker export-import performance could hurt loan demand, increase credit risk, and affect the quality of banking assets. Although credit margins in Serbia are expected to gradually decrease toward EU levels, they will remain higher due to elevated risks outside the EU.
Insurance companies foresee rising insurance costs driven by global trade tensions and instability in world financial markets, including fluctuations in bond and equity values. A decline in foreign direct investment, often insured, could also reduce insurance premiums.
Despite these challenges, Serbia’s financial sector remains relatively strong. Banks reported record profits in 2024, with Raiffeisen Bank leading at approximately 248.5 million euros, and Intesa holding the largest market share at 15.5 percent. In the first quarter of 2025, banks earned around 406 million euros, a 42 percent increase year-over-year.
However, loan approvals reveal that most borrowing by businesses is for working capital and liquidity, while over half of household loans are cash loans. Banks have increased lending to the government, which owed 7.6 billion euros in state debt securities by March 2025. Notably, government borrowing from banks doubled to about 4.1 billion euros compared to the prior two years.
While lending to the government is profitable and low-risk for banks in the short term, it crowds out private sector borrowing, which may negatively affect banks’ long-term business. The growth in cash loans and government indebtedness poses risks for the broader financial market.
The domestic insurance market reached total premiums of 1.5 billion euros in 2024, with Dunav Insurance achieving the largest share of 393.2 million euros.
