Serbia’s economic growth will remain muted in 2023, and then accelerate in 2024 and 2025, exceeding three percent, as the impact of lower inflation on real disposable income will stimulate private consumption, the European Commission estimated in its Autumn Economic Forecasts.
The Commission forecasts that in 2023, Serbia will record a growth in gross domestic product (GDP) of 2.2 percent, in 2024 by 3.1 percent, and in 2025 by 3.7 percent.
At the same time, a further decline in the general government deficit and the debt-to-GDP ratio is expected, with the help of high nominal GDP growth and smaller capital transfers to state-owned energy companies.
Inflation in Serbia in 2023 is forecast by the Commission to be 12.7 percent, to fall to single digits in 2024, to 5.5 percent, and then to 3.6 percent in 2025, within the framework targeted by the central bank.
In the report, the European Commission warns of great uncertainty and significant risks for lower growth, given that Russian aggression against Ukraine continues and the intensification of other geopolitical tensions.
It is also warned that inflation more persistent than currently projected could adversely affect the increase in purchasing power and thus the slowdown of consumption and real growth. It is also estimated that a prolonged slowdown in the economies of Serbia’s leading trading partners, especially in the EU, could threaten exports.
On the other hand, a larger transfer of production (from the EU to neighboring countries) could have a positive effect on foreign investments and Serbian exports, the Commission assessed.
When it comes to the region of the Western Balkans, a moderate acceleration of economic growth is expected in North Macedonia and Bosnia and Herzegovina, while the forecast for Montenegro and Albania has been reduced.