Production in Serbia is on the rise, with the country experiencing a 5.7 percent growth in real gross domestic product (GDP) in the first two months of 2024 compared to the same period last year. This growth surpasses the projected annual rate of 3.5 percent. However, despite this positive trend, inflation remains a concern, standing at twice the level of the EU average at 2.6 percent.
Industrial production in February 2024 saw an increase of 8.4 percent compared to the same month in the previous year, largely driven by growth in the processing industry. Additionally, February marked the first year-on-year increase in the value of foreign trade exchange after a continuous decline over the past ten months. Approximately four-fifths of goods imports were covered by exports in the first two months of 2024, up from 75.7 percent the previous year.
Foreign direct investment inflows have also exceeded last year’s figures for the same period, contributing to a surplus in the republic’s budget. There has also been substantial growth in earnings and turnover in retail trade.
Despite these positive developments, inflation remains a concern. While there has been a gradual decline in inflation since April 2023, Serbia’s inflation rate is still twice as high as that of Europe and is decreasing more slowly compared to other countries. Professor Miloje Arsić attributes this to several factors, including delays in adjusting energy prices and an expansionary fiscal policy that led to increased demand outpacing production growth.
The manufacturing sector in Serbia has been experiencing steady growth since August last year, with the processing industry showing widespread growth across various branches. However, certain sectors such as machinery and equipment production, rubber and plastics, wood processing, and pharmaceuticals have seen declines or slower growth.
Looking ahead, the key challenge for Serbia’s economy in 2024 is whether new investments and domestic consumption will be sufficient to withstand external pressures, particularly amidst the deepening crisis in the manufacturing sector of the Eurozone. Despite these challenges, Serbia’s industrial production remains resilient, with the processing industry driving growth across multiple sectors.
