Aleksandar Vlahović, president of the Association of Economists of Serbia, stated at the official opening of the 32nd Kopaonik Business Forum that Serbia’s economic growth for this year and in the medium term is expected to be between four and five percent. He also highlighted that a significant infrastructure investment cycle will conclude by 2027. The theme of this year’s forum is “Serbia 2027: Striving for an Economy with High Returns,” reflecting the anticipation that 2027 will mark the completion of this major infrastructure investment period. Vlahović emphasized that the forum is taking place against a backdrop of ongoing complex geopolitical and geoeconomic challenges.
Vlahović noted that Serbia’s economy grew by 3.9 percent last year and outlined that in the medium term, consumption and investments will continue to be the primary drivers of economic growth. He mentioned that inflation had been on a downward trend and that monetary policy had been eased, with foreign exchange reserves reaching a record level of 29 billion euros, while public debt was reduced to below 50 percent of GDP.
“Public debt has already dropped below 50 percent, which was initially projected to happen by 2028,” Vlahović said. He added that foreign direct investments (FDI) continued to perform well, with an expected inflow of 5.2 billion euros by the end of 2024, amounting to 5.6 percent of the gross domestic product. The fiscal deficit stood at two percent of GDP, although after adjustments, it rose to 2.7 percent, with a slightly higher fiscal deficit expected in 2025, projected at three percent.
In the context of the fiscal strategy for 2024-2027, Vlahović pointed out that the government is shifting towards a more expansive fiscal policy. He noted that borrowing would be a key source of funding for the budget deficit in 2025. The public debt at the end of this year is expected to be 42 billion euros, still well below 50 percent of GDP.
Vlahović also highlighted that in October of the previous year, Serbia received an investment-grade rating of BBB- with a stable outlook from Standard & Poor’s, the first such rating in the country’s history. This, according to Vlahović, will help Serbia secure more favorable borrowing conditions on the international financial market and positively influence foreign investment.
However, Vlahović cautioned that Serbia’s economic prospects will be significantly affected by external geopolitical risks. These risks include the ongoing trade war between the USA and China, potential trade tensions between Europe and China, the situation in the energy sector, the resolution of the ownership structure of the Serbian Oil Industry, and the global economic instability stemming from uncertain external demand and financial market volatility.
He also noted that despite significant capital and foreign investments, the structure of Serbia’s economy has remained largely unchanged over the past two decades. Traditional sectors still employ more than half of the workforce, and their contribution to GDP has consistently been between 43 and 45 percent over the last 20 years.
