According to a flash estimate, Serbia’s GDP growth slowed to 2 percent in the first quarter of 2025, down from 3.9 percent in 2024. This decline is primarily due to a continued slowdown in public and private investments, as well as a decrease in goods exports to Western markets.
The Center for Advanced Economic Studies (CEVES) notes a 55 percent drop in foreign direct investment and an eight percent decline in state capital spending compared to the same period last year. However, exports of information and communication technologies (ICT), creative services, ores, and base metals continued to grow, helping keep overall GDP growth in positive territory.
The export structure shifted, with increased exports from the mining and base metals sector (up 16 percent), while sectors tied to global value chains like the automotive industry, as well as labor-intensive industries, saw a 20 percent decline.
Service exports, led by ICT, showed real growth and made a strong contribution. Domestic consumption was stable overall: government consumption increased, while private consumption showed signs of weakening, reflected in fewer overnight stays by domestic tourists, lower VAT revenue, and stagnant retail sales.
Economic sentiment in Serbia dropped below 100, aligning with the EU average, largely due to a sharp decline in confidence in the services sector. Sentiment in industry and construction also declined, especially in construction. Official data showed that construction activity dropped 1.4 percent in current prices and 5.6 percent in constant prices in the first quarter.
Retail sentiment remained relatively stable, though consumer confidence worsened slightly. This decline comes amid broader stagnation in Europe, with Germany’s sentiment among the lowest since the pandemic.
CEVES concludes that recent protests were not the main cause of the economic slowdown, but they highlighted Serbia’s reliance on unstable economic foundations. Sustainable future growth will require institutional support, elimination of domestic market discrimination, and better education and skills development to attract new types of investors.
