Latest macroeconomic data from February confirm a slowdown in Serbia’s economy. Most indicators show either a decline or minimal growth compared to the same period last year, suggesting 2025 may fall short of expectations.
- Industrial production down: Industrial output fell by 1.8% compared to February 2024 and 2.4% compared to last year’s average. Manufacturing dropped by 2.5%, largely due to reduced energy production, especially in petroleum products.
- Trade and revenue trends: Retail sales saw marginal real growth of just 0.5%. Meanwhile, imports rose by 7%, while exports dropped by 4.1%.
- Fiscal weakness: State revenue is stagnating or declining. Public revenue fell 0.8% in real terms, while tax revenue rose only 1.8%. Notably:
- VAT revenue from imports fell 1.1%.
- Corporate tax revenue dropped nearly 25%.
- Non-tax revenue fell similarly.
- Excise revenue decreased by 7.2%.
- Rising expenses: Public spending increased, with wages up 3.4% and spending on goods/services up 4.7%.
- GDP growth below forecast: Economist Milojko Arsić believes GDP growth will fall below the projected 4%, influenced by:
- Potential continuation of U.S. tariffs affecting Serbian exports.
- Uncertainty over sanctions on NIS (national oil company).
- Broader European economic stagnation, particularly in the automotive sector.
- Industry struggles: Rising energy and labor costs are pushing some industries, like textiles and auto parts, to relocate to cheaper markets in Asia. Some foreign companies have already announced closures or halted investments.
- Outlook: Stagnant VAT growth reflects broader economic stagnation. Arsić emphasizes that both domestic political uncertainty and international tensions will play key roles in shaping economic outcomes for the rest of the year.
