The European Union’s economy is showing slight growth after a prolonged period of stagnation, with inflation continuing its downward trend. Among the candidate countries for EU membership, Serbia stands out with an expected economic growth rate of 4.2% in 2025, according to the European Commission’s autumn economic forecast, which covers 27 EU member states and nine candidate countries.
For 2026, Serbia’s GDP growth is projected to rise slightly to 4.3%, driven primarily by domestic consumption. The forecast cites the liberalization of the banking sector’s credit policies and increased demand for loans from both businesses and households as key contributors to this growth.
Regarding inflation, the Commission forecasts a decrease for Serbia, with inflation expected to drop from 4.7% in 2023 to 3.7% in 2025, bringing it within the target range set by the National Bank of Serbia (NBS) of 3% ±1.5%.
Despite weak foreign demand impacting Serbia’s export sector, the Commission anticipates a gradual recovery in exports during 2025 and 2026, supported by direct foreign investments and Serbia’s expanding production capacities. The service sector in Serbia, especially the IT, business, and tourism sectors, is expected to continue flourishing.
However, Serbia faces challenges. Its foreign trade deficit, which was 2.6% of GDP in 2023, is projected to rise to 5% of GDP by 2025 due to increased imports. The Commission notes that weak growth among Serbia’s key trading partners and the persistent threat of inflation could undermine purchasing power and economic stability.
Domestic demand is expected to receive a boost from investments related to the organization of the EXPO 2027 world exhibition, although this could lead to unforeseen increases in public spending.
Labor market conditions in Serbia are improving, with unemployment decreasing, while wages are expected to continue rising. After a significant 14% increase in wages in 2023, growth in wages is forecast to slow to 7% by 2026, in line with falling inflation pressures. Real wage growth is expected to remain positive.
The Commission has also forecast Serbia’s budget deficit to be 2.9% for 2023, with projections for 2026 and 2027 at 3%, and public debt to decrease slightly from 48.4% of GDP in 2023 to 48% by 2026.
Economic outlook for the region
For other countries in the region, similar growth is expected. Montenegro is forecast to achieve a 4.2% GDP growth rate in 2025, although inflation is expected to rise after a decrease in August 2023 to 2%. Montenegro’s budget surplus of 1.3% in 2023 may turn into a deficit due to increased wages and debt repayments, leading to a rise in public debt.
North Macedonia’s economy is expected to grow by 2.6% in 2025, with inflation dropping to around 2%. Albania’s GDP is forecast to grow by 3.6%, with inflation within the target range of 3%. Bosnia and Herzegovina’s economic growth is also expected to be solid at 3.8%, despite a slight increase in inflation.
EU economic outlook
For the European Union as a whole, GDP growth of 1.5% is projected for 2025, following a modest 0.9% growth in 2023. The eurozone will experience slightly weaker growth, with 0.8% expected for 2023 and 1.3% for 2025. However, inflation in the EU continues to fall. After a 2.6% inflation rate this year, down from 6.4% last year, inflation is expected to drop further to 2.4% in 2025. The eurozone is expected to see an even lower inflation rate of 2.1% next year.
Overall, while challenges remain, especially in the areas of inflation and trade imbalances, Serbia and the broader region are on a positive economic trajectory with solid growth expected over the next few years.
