Serbia’s increasingly combative economic landscape is further chipping away at investor confidence. Combined with a cocktail of fiscal constraints, inflationary pressures and political uncertainty that makes this challenge even greater. The country’s fiscal stance is still mildly expansionary, despite leading to projected fiscal deficits of roughly 3% of GDP through 2028. Concerns over public debt Serbia’s public debt remains calm. To counteract the surge in inflation beyond the target range, the government introduced wholesale and retail margin caps.
Serbia Inflation is expected to remain near the top of the target band until year-end. This is largely the result of food price shocks induced by extreme weather events and a steep rise in oil prices. This inflationary trend has understandably been a cause for concern as it recently neared 5%. Economists are predicting a slow return to 2 percent inflation by 2026. For the moment, though, it continues to squeeze households’ cost of living and weigh on consumer sentiment.
When halfway through 2025 Serbia’s economy came to a standstill with less than 2% y-o-y growth. This led experts to downgrade their full-year growth forecasting to 2.7%. Despite these challenges, consumption within the country remains resilient, suggesting that domestic demand could sustain some level of economic activity. The post-COVID investment boom has ebbed, creating real concern about the country’s long-term growth potential.
Looking forward, a strong recovery of over 4% is projected for Serbia’s economy in 2026. That rosy outlook is being fueled by Expo-related construction and new auto manufacturing efforts that are projected to pump the economic brakes on a recession. These industries can be an important part of leading recovery as our nation overcomes its ongoing economic struggles.
Political uncertainty with mass public protests against the government and corruption add another layer of peril to Serbia’s economy. Protests have continued to explode against the construction in Novi Sad, exacerbated by last year’s tragic events. This wave of unrest continues even after the establishment of a new government. This continuing unrest hangs heavy on investor sentiment, making it all the more difficult to draw in the foreign investments essential for economic growth.