Serbia’s economy achieved a 3.9 percent annual growth in 2024, surpassing the previously projected 3.5 percent, driven by strong performance in the construction, industry and service sectors. The World Bank report indicates that Serbia has the potential to accelerate its medium-term growth rate to over 4.0 percent, but achieving this requires significant structural reforms.
Nikola Pontara, Director of the World Bank office in Serbia, emphasized the need for reforms to mobilize the private sector, improve the business environment, enhance human capital, strengthen institutions, and foster closer integration with the Western Balkans and the European Union. Additionally, efforts to implement green and digital transitions will be crucial for sustaining growth.
The report projects that Serbia’s growth rate in the coming years will primarily be driven by consumption, with some contribution from investments. However, risks to this scenario include challenges faced by state-owned enterprises, trade policy uncertainty affecting exports, and potential impacts of extreme weather events on agriculture and infrastructure.
On a positive note, inflation is expected to gradually decrease, aligning with the National Bank of Serbia’s target range. Stable economic growth, combined with targeted social assistance, is anticipated to further reduce poverty.
Despite challenges, including a severe drought that impacted agriculture in the summer of 2024 and contributed to a slowdown in growth, Serbia’s unemployment rate averaged 8.6 percent, with a record employment rate of 51.4 percent. The poverty rate decreased to 7.7 percent, with further declines expected, though at a slower pace due to the chronic unemployment of the remaining poor population, which limits their ability to benefit from economic growth.
