The World Bank’s latest report highlights Serbia’s rising public debt while forecasting accelerated economic growth and declining inflation. The report notes an increase in the employment rate and a reduction in poverty levels.
Ahead of the upcoming autumn meetings with the International Monetary Fund, the World Bank anticipates a moderate economic upturn in the Western Balkans, driven by heightened consumption and investment. Collective growth in Albania, Bosnia and Herzegovina, Montenegro, North Macedonia and Serbia is projected to reach 3.7% by 2025, slightly higher than earlier forecasts.
In the Western Balkans, inflation has decreased this year, albeit at a slower pace, with consumer prices dropping from 4.4% at the start of the year to 3.2% by July. Serbia’s inflation rate was slightly above the regional average at 4.3% until July, with potential food price pressures due to recent weather conditions.
Serbia’s economic growth accelerated in the first half of the year, expected to reach 3.8%, though this may be revised due to summer drought impacts. Public debt rose significantly in June to 52.6% of GDP, with the deficit projected to reach 4.1% this year, more than double compared to the same period in 2023.
The labor market showed improvements, with unemployment at 8.2% in the second quarter. Salaries increased by 14.7% in nominal terms and 9.2% in real terms in the first half of the year. Despite a rise in inflation in July due to food prices, it is expected to remain within the National Bank of Serbia’s target range.
The report emphasizes that Serbia’s economy is expected to grow by 4% in the medium term, though risks remain, particularly from climate change affecting agriculture and infrastructure. Direct foreign investments have remained stable at around €2 billion in the first half of the year.
The poverty rate has declined to 6.9%, with expectations for continued gradual reduction thanks to economic growth. However, poverty among pensioners, the long-term unemployed, and those outside the labor market is rising, highlighting the need for targeted social assistance to support vulnerable populations.
