The investments needed for the specialized exhibition “EXPO 2027” and the accompanying investment program “Leap into the Future” are not yet fully factored into the economic growth forecasts for Serbia. This is because many expenses for these projects have not been reliably planned or announced, as outlined in the spring economic forecasts for Serbia published by the European Commission.
Additionally, the EC report indicates that increased public investments in Serbia could lead to higher GDP growth, but also to unforeseen growth in public expenditures.
Serbia’s economic growth has accelerated in recent quarters, with gradual growth predicted in the coming years. According to the EC’s projections, economic growth is expected to reach 4.3 percent in 2025.
The EC anticipates that growth in the Serbian economy will be driven by private consumption, supported by rising real incomes, as well as exports, which will benefit from expanded production capacities in Serbia. This expansion is attributed to significant inflows of foreign direct investments (FDI).
While the Serbian economy has shown relative resilience to external shocks in recent years, persistent inflation higher than currently projected could dampen purchasing power growth and weaken consumption and real growth. The deficit-to-GDP ratio is forecasted to continue declining to 1.5 percent, with the debt-to-GDP ratio projected to fall below 50 percent by 2025.
Employment experienced robust growth in 2023, fueled in part by a significant increase in immigration from Russia. Concurrently, unemployment gradually declined to around 9 percent of the working-age population, according to the EC.
The trend of employment growth and slight reduction in unemployment is expected to persist in 2024 and 2025.
In the initial months of 2024, nominal wages in both the public and private sectors increased by approximately 15 percent compared to the same period the previous year. However, the EC anticipates wage growth will gradually slow due to reduced inflationary pressures.
Consumer price inflation in the latter half of 2023 showed a downward trajectory but still averaged 12.1 percent. Food price increases notably contributed to inflation.
One-time pressures on inflation in 2023 resulted from rises in electricity and gas prices. Such extraordinary increases are not anticipated in the following years.
It is projected that by mid-2024, inflation will return to within the Central Bank of Serbia’s target of 3 percent with a permissible deviation of plus or minus 1.5 percent. Inflation is expected to further decelerate to slightly above three percent in 2025.
