Serbia’s economy is expected to grow by 2.8% in 2025, which is about one fifth lower than the World Bank’s forecast from April. Though Serbia remains the largest economy in the Western Balkans, its growth is projected to slow the most in the region, according to the World Bank’s autumn report.
President Aleksandar Vučić has blamed the slowdown on “blockades and idleness,” referring to anti-government protests that began in November 2024 after the collapse of the Novi Sad railway station canopy. Despite his earlier expectations of growth above 3%, the World Bank now forecasts a 2.8% increase in GDP, down by 1.1 percentage points compared to 2024 and 0.7 percentage points lower than the April projection.
Richard Record, the World Bank’s lead economist for the Western Balkans, told BBC Serbian that Serbia’s economy is losing momentum due to external and domestic uncertainty, which has weakened business confidence and caused a sharp drop in private investment. Foreign direct investment (FDI) has fallen by more than half compared to last year.
Growth across the Western Balkans is also slowing, from 3.6% in 2024 to 3% in 2025, though North Macedonia and Montenegro are expected to see slight improvements. Forecasts for Serbia and Bosnia and Herzegovina were lowered, while those for Albania increased and Kosovo remained unchanged.
Agriculture and services have both struggled in Serbia. The country saw lower yields of corn, sugar beet, soy, and several fruits, while wheat and sunflower production improved. Rising food prices have affected consumer confidence despite relatively stable consumption and output. The services sector underperformed due to domestic and international instability, and construction—once a fast-growing sector—has stagnated.
Economist Aleksandar Zdravković from the Institute of Economic Sciences noted that this is the second time the World Bank has reduced Serbia’s growth outlook for the year, initially expected at 4%. Political uncertainty, global economic headwinds, and sanctions on Naftna Industrija Srbije (NIS), introduced on October 9, have further dampened growth.
He emphasized that while political issues are usually short-term, structural weaknesses remain: overreliance on FDI, low-profit investment sectors, institutional inefficiency, corruption, lack of competitiveness, and poor transparency in public finances.
Despite these problems, Serbia’s expected 2.8% growth would still surpass the European Union average, allowing modest convergence in living standards. Record said Serbia has significant potential and could double its growth rate with the right structural reforms.
The broader regional slowdown is linked to weaker private investment and reduced activity in European economies, especially Germany and Italy, which are Serbia’s key trade and investment partners. Economies more dependent on manufacturing, like Serbia, are more vulnerable than those driven by services and tourism, such as Albania.
The World Bank also warned about growing labor shortages across the Western Balkans, forecasting a decline of 190,000 workers over the next five years. About 20% of workers may need retraining due to the shift to renewable energy and artificial intelligence.
Zdravković called the outlook concerning, noting that low birth rates worsen the problem. He suggested that, as in other European countries, importing labor from lower-income regions will likely become necessary.
