In February, Serbia’s gross domestic product (GDP) experienced a robust growth of 5.9 percent, announced Finance Minister Sinisa Mali. This growth continued into the first two months of the year, reaching 5.7 percent. Notably, a significant portion of this economic upswing stemmed from the industrial sector, which is surprising given the sluggish economic activity in the Eurozone, particularly in Germany, a key market for Serbian industrial goods.
However, preliminary data suggests a slowdown in March, largely attributed to the refinery overhaul in Pancevo, which temporarily halted production.
Ivan Nikolić, editor of Macroeconomic Analysis and Trends (MAT), remarked that the year began on a positive note, especially for manufacturing, defying expectations. “The start of the year was promising, building on the momentum from the previous year,” Nikolić stated. He attributed this unexpected growth partly to non-European investments driving a portion of Serbia’s production capacity.
Nikolić speculated that when the first-quarter GDP growth estimate is released, it may exceed the 3.5 percent projected by most economic institutions, both domestic and international, if annualized for the entire year.
Looking ahead, Nikolić highlighted the challenges in forecasting GDP growth for the entire year due to ongoing uncertainties such as geopolitical tensions and potential shocks in the raw materials market. However, he anticipates the production of the electric Stellantis model to contribute positively to growth, albeit not at the scale of Fiat’s impact on Serbia’s economy a decade ago.
Notably, industry played a significant role in the 5.7 percent GDP growth recorded in the first two months of the year, contributing 1.7 percentage points. Construction and trade each added 0.4 percentage points, while transport and telecommunications contributed 0.15 points. Additionally, all other services collectively contributed around two percentage points, with net taxes adding one percentage point to economic growth.
Despite uncertainties, Nikolić views Serbia’s projected growth of over three percent this year as a return to a long-term growth trend. He emphasized that sustaining this growth amidst global challenges is a notable achievement.
However, projections for Serbia’s GDP growth vary among institutions. The Vienna Institute for International Economic Studies (Wiiw) forecasted Serbia’s growth at three percent for this year and 3.3 percent for 2025, citing potential risks such as energy price hikes and supply chain disruptions.
Other international institutions, such as the International Monetary Fund (IMF) and the World Bank, offer more optimistic projections, while domestic experts and the National Bank of Serbia provide a range of estimates.
Nikolić underscored the importance of resolving geopolitical tensions, particularly the conflict in Ukraine, to support Europe’s economic recovery and boost export demand, including for Serbia. He highlighted the structural differences between European and American economies, emphasizing the significance of manufacturing in Europe’s GDP composition compared to the service-oriented nature of the U.S. economy.
