Serbia’s economy achieved a year-on-year growth of 3.9% in 2024, exceeding the previously projected 3.5%, primarily due to unexpectedly strong performance in the construction, industry, and services sectors. The country also has significant potential to accelerate its medium-term growth rate to over 4%, according to a report by the World Bank.
Nikola Pontara, the Director of the World Bank Office in Serbia, emphasized that Serbia would need to undertake substantial reforms to achieve this growth rate. “To achieve this, Serbia must implement significant structural reforms to mobilize the private sector, improve the business environment, enhance human capital, strengthen institutions, and foster closer ties with the Western Balkans and the European Union. At the same time, efforts should be made to implement green and digital transitions,” he said, as reported by Tanjug.
The report highlights that Serbia’s expected growth rate in the coming years, estimated to be around 3.5% to 4%, will primarily be driven by consumption, but to some extent, by investments as well. However, the realization of this scenario could be threatened by negative risks related to the performance of state-owned enterprises and the uncertainty of trade policies affecting external demand for Serbian exports. Additionally, extreme weather events could significantly impact agriculture and infrastructure.
On the positive side, the report forecasts a gradual reduction in inflation, bringing it within the target range set by the National Bank of Serbia. “Stable economic growth, combined with targeted social assistance, will be crucial for further poverty reduction,” the report states. The poverty rate fell to 7.7% last year, with expectations for a continued decline, albeit at a slower pace. However, the World Bank notes that the remaining impoverished population often faces chronic unemployment, which means they do not benefit from the economic growth.
