European Commission forecasts economic growth of 2.8% for Serbia this year

After a significant slowdown last year, Serbia’s economic growth will reach 2.8% this year and 3.9% next year as domestic demand benefits from large public investments linked to the EXPO 27 trade fair and from rising wages and pensions, the European Commission forecasts.

The European Commission’s Spring Economic Forecasts, published today, also forecast that Serbia’s fiscal deficit will temporarily increase to 3.2% in 2026 as the government reduced excise duties on fuel in response to the conflict in the Middle East, and that public debt will increase slightly to 45% of gross domestic product (GDP) next year.

The Commission said that Serbia’s economic growth slowed to 2% in 2025 from 3.9% in 2024 due to a slowdown in investment and private consumption growth affected by the ongoing political unrest caused by student protests, as well as a negative contribution from net exports. Net foreign direct investment has also halved compared to 2024.

The report states that short-term indicators point to an uneven start to 2026, that the economic sentiment indicator, although still below the long-term average, showed an improving trend in the first quarter, but that industrial production is declining in most subsectors, except for the automotive industry.

The Commission’s analysts expect public investment, which underperformed in 2025, to gain momentum this year ahead of the EXPO 2027 exhibition in Belgrade and the investment program “Leap into the Future - Serbia 2027”.

The part of the report on Serbia concludes that, while the economic outlook appears positive, several downside risks remain, including continued domestic political instability and the recent decline in foreign direct investment, which could potentially undermine medium-term growth prospects.

Rapid wage growth could also lead to lower-than-expected external competitiveness, the report warns.

In the Western Balkans, Albania is forecast to grow more than Serbia this year, at 3.3%, and North Macedonia at 3.2%, while Montenegro will have the same growth as Serbia, at 2.8%, and Bosnia and Herzegovina at 1.8%.

The EU is forecast to experience weaker economic activity in 2026 as the conflict in the Middle East triggers a new energy shock that is rekindling inflation and shaking economic sentiment.

The Union’s GDP will slow to 1.1% this year from 1.5% in the previous year, which is 0.3 percentage points less than in the Autumn Forecast. For next year, the Commission forecasts growth of 1.4% for the Union.

European Commission

EXPO 27

fiscal deficit of Serbia

economic growth of Serbia