IFIMES: Serbia to become the largest economy in Southeast Europe by 2027, surpassing Slovenia by the end of the decade

According to an analysis by the International Institute for Middle East and Balkan Studies (IFIMES) from Ljubljana, based on projections by the International Monetary Fund, Serbia is approaching a turning point in the regional economic order. The report states that in 2026 Serbia should catch up with Croatia in terms of nominal gross domestic product, while it is expected to take over the position of the largest economy in Southeast Europe as early as 2027. At the same time, the analysis indicates that by the end of the decade Serbia will significantly surpass Slovenia in terms of overall economic strength, thus confirming its positioning as the central economic pillar of the Western Balkans.

In its analysis entitled “Serbia 2026: Economic breakthrough in an era of growing global and regional challenges,” IFIMES assesses that this economic rise is taking place in a significantly more complex and uncertain global environment than in previous years. The weakening of multilateral institutions, the rise of geopolitical tensions and the increasingly pronounced link between the economy and security create an environment in which economic growth in itself no longer represents a guarantee of long-term stability. In this context, Serbia is currently in a phase of relative macroeconomic consolidation, but with increased external and internal risks.

According to IMF projections cited by IFIMES, real GDP growth in Serbia in 2026 could range between three and four percent, with inflation under control and a stable labor market. Fiscal deficit and public debt remain within sustainable limits, while the growth of the current deficit is interpreted primarily through investments and imports related to development projects. The Institute states that such indicators confirm the resilience of macroeconomic policies, but also indicate the need to continue structural reforms and strengthen the institutional environment.

Special emphasis is placed on energy security as a key element of future development. IFIMES points to the importance of strategic decisions in the energy sector, including plans to strengthen the state’s influence in Naftna industrija Srbije and ensure the long-term stability of the Pancevo Refinery. Foreign direct investment, which exceeded several billion euros last year, together with infrastructure projects and an industrial base, is an important pillar of growth.

At the same time, the analysis warns that increasing overall economic strength does not automatically mean an increase in living standards. Although Serbia is taking on a leading role in the region in terms of the size of its economy, it still lags behind Croatia and Slovenia in terms of GDP per capita. This gap, according to IFIMES, creates a parallel reality in which economic growth strengthens the country’s international position, while internal social challenges require careful alignment of development policies with the needs of citizens.

In the final part of the report, IFIMES considers several possible directions for future development, from stable growth in conditions of controlled geopolitical risks, through accelerated economic momentum based on energy and institutional reforms, to an unfavorable scenario in the event of more serious global disruptions and a decline in investments. The Institute concludes that Serbia’s ability to transform quantitative economic growth into sustainable and inclusive social development will be a key test of economic and social policy in the coming decade.

IFIMES

International Institute for Middle East and Balkan Studies Ljubljana

IMF

growth of GDP of Serbia

leading economies of Southeast Europe

energy security