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2.10.1 GDP growth
Serbia was one of the Emerging European countries that was least
affected by the pandemic, and in 2021, Serbia posted strong growth of
7.5%, and went on to record GDP growth of 4.5% in the first quarter
and 3.9% in the second quarter of 2022. However, growth slowed in the
second half of the year, amid the broader slowdown across Europe. In
the third quarter, annual GDP growth is estimated to come in at just
1.1% y/y, down from 4.1% y/y n Q2.

“[The] economic slowdown was sharper than expected, mostly
reflecting this year’s drought and an agricultural season considerably
underperforming the assumptions, the reduced external demand and a
further rise in production costs, translating primarily into lower
construction and manufacturing output. Also, due to the low water
levels, the energy sector contracted further,” Serbia’s central bank, the
National Bank of Serbia (NBS) said.

In early October, the International Monetary Fund (IMF) kept its GDP
growth projection for Serbia at 3.5% for 2022. For 2023, the IMF
expects the Serbian economy to grow by 2.7%, down by 1.3
percentage points from the April forecast, and to increase by 4% in
2027, it said in its latest World Economic Outlook report.

The World Bank's latest forecast is for growth of 3.2% in 2022 and
2.7% in 2023 but it warned that risks are tilted to the downside.

“The key challenge is the performance of the Serbian energy sector
and availability of electricity and gas in the winter of 2022/23. Another
challenge will be the availability of financing the fiscal deficit since
interest rates increased significantly over recent months and
subscription rates to auctions of T-bills remain low,” the World Bank
said in October.

Over the medium term, the Serbian economy is expected to grow
steadily at around 3% annually, supported by consumption and
investment, the World Bank said.

In November, the European Commission downgraded its GDP growth
forecast for Serbia for this year to 2.7% from 3.4% in its spring forecast.
Serbia's GDP growth forecast for 2023 was downgraded by 1.4
percentage point to 2.4%. For 2024, the Commission anticipates GDP
growth of 3%.

“The Serbian economy is projected to slow to 2.7% in 2022 and 2.4% in
2023 as the impact of high inflation on real disposable income dampens
private consumption,” the Commission said in its latest European
Economic Forecast report.

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