Moody’s, the third major global credit rating agency following Standard & Poor’s and Fitch, has upgraded Serbia’s credit outlook from stable to positive while maintaining the country’s Ba2 credit rating. This development continues the trend of positive evaluations of Serbia’s macroeconomic performance by leading institutions and indicates favorable growth prospects for the near future, according to the National Bank of Serbia (NBS).
The Moody’s report highlights that Serbia’s GDP growth prospects have exceeded previous expectations, reflecting the strength of the country’s economy. Key factors contributing to the improved outlook include:
- Positive medium-term economic growth prospects, with potential for faster growth due to increased investment and ongoing structural reforms.
- Enhanced resilience of the economy to potential new external shocks.
- Strengthened public finances due to cautious fiscal management.
- Well-capitalized and liquid banking sector with high asset quality.
Moody’s forecasts an acceleration of economic growth in the current and following year, projecting a real GDP growth of 3.8% for the current year and 4.2% for 2025. This growth is expected to be supported by a reduction in inflation, favorable labor market conditions, strong domestic demand, and ongoing investment cycles. The report also positively assesses the “Jump to the Future – Serbia Expo 2027” program, which is anticipated to boost public investment, with its share in GDP expected to reach 7.5% by 2027.
The positive outlook is further supported by maintained macroeconomic stability and sustainable economic growth, backed by a relatively dynamic production sector, a favorable investment climate, and a skilled workforce, which contribute to high and diverse foreign direct investment inflows.
The report also notes very good results achieved during the current International Monetary Fund (IMF) arrangement. Diversification of energy supply sources has reduced dependence on energy imports, and successful reforms in the energy sector have mitigated fiscal risks.
Regarding fiscal indicators, Moody’s expects the budget deficit to remain moderate despite planned significant state investments. The medium-term fiscal framework anticipates a gradual reduction in the fiscal deficit and a continued decline in public debt, projected to be around 50% of GDP by 2027.
Moody’s report also emphasizes that external imbalances will remain low, with the current account deficit fully covered by net inflows of foreign direct investment and strong foreign exchange reserves at record levels, enhancing resilience to external shocks.
Governor Jorgovanka Tabaković commented on the Moody’s decision, stating, “The fact that all three major global rating agencies have improved Serbia’s credit outlook in recent months confirms that we have responded appropriately to challenges in recent years. Alongside mitigating negative external shocks, we have developed our economy and worked towards improving the standard of living for all our citizens. This policy has yielded results and guarantees that we will continue to maintain overall stability and a favorable investment and business environment, placing us among rapidly developing countries.”
