Serbia Emerges as One of Europe’s Fastest-Growing Economies in 2024
Economic data highlights significant growth in Serbia’s industrial output and consumer activity.
In January 2025, retail trade in Serbia recorded a nominal increase of 6.7% compared to the same month in the previous year, with an inflation-adjusted growth of 2.7%.
The Serbian budget for January was in surplus, achieving a long-term target with an average net wage of €926 reported in December 2024.
Data released shows monthly inflation rates of 0.1% in December 2024 and 0.6% in January 2025, with year-on-year inflation at 4.3% and 4.6%, respectively.
These figures reflect a slight persistence of inflation exceeding the upper limit of the National Bank of Serbia's target range since April of the previous year.
Sector analysis reveals that in January 2025, year-on-year growth was noted in the manufacturing industry (2.6%) and mining (6.9%), while the energy supply sector, which includes electric power and gas, experienced a decline of 9.1%.
Compared to December 2024, after seasonal adjustments, production increased in total industry (0.7%), mining (1.8%), and energy supply (6.1%).
However, the manufacturing sector showed a decreased output of 0.3%.
The energy supply sector, contributing 15.3% to overall industrial production, has been on a recovery trajectory, although production levels remain approximately 5% lower than in January 2024, primarily due to adverse hydrological conditions.
Hydroelectric production in January and February 2025 fell by 31.6% and 31.9%, respectively, year-on-year, with significant decreases reported from specific hydroelectric plants including Đerdap, Bajna Bašta, Uvac, Kokin Brod, and Vrla.
In 2024, hydroelectric production dropped 20% compared to 2023, and by about 3.6% compared to the average output from 2019 to 2023.
Concerns regarding the long-term trends in industrial production are influenced by economic fluctuations among key trading partners in the Eurozone, with Germany's economic indicators remaining particularly weak.
Recent parliamentary elections in Germany have sparked optimism for potential fiscal reforms, though trade tensions with the United States pose risks, particularly targeting the European automotive and pharmaceutical sectors.
Maintaining political stability is deemed essential for supporting the growth trajectory of Serbia's industrial production.
Delays in launching new electric vehicle production at the FCA Serbia plant have been noted.
Stellantis, the parent company of FCA, is facing significant market challenges, with a 60% decrease in its share price over the past year.
Additionally, the looming possibility of sanctions affecting Serbia's oil industry, which is largely Russian-owned, could impact economic stability.
A recent extension of 30 days has been granted to finalize negotiations on this matter.
The company's performance is further impacted by the operational interruptions at the oil refinery in Pančevo, which experienced two months of maintenance last spring.
This refinery, part of the NIS group, supplies not only domestic needs but also caters to the regional market with various petroleum products.
In January 2025, Serbia's manufacturing sector reported growth in 11 out of 24 areas contributing to approximately 34% of the overall industrial production index.
The primary contributors to the manufacturing sector's growth included rubber and plastic products as well as coking and petroleum derivatives, while electronics and optical products also exhibited robust performance.
Notably, in 2024, the current account deficit reached €5.208 billion, marking an increase of 188.7% to €1.804 billion from the previous year.
This significant deficit results from a widening merchandise trade deficit, net income outflows from direct investments, and a reduction in net state income and remittances from abroad.
The net inflow of foreign direct investments (FDI) for January to December 2024 was recorded at €4.600 billion, an increase of 7.9% compared to the previous year.
The structure of these inflows indicates that ownership investments now account for 79.7%, while intercompany borrowing has decreased to 20.3%.
In December 2024, the current account deficit was €933.2 million, representing a 34.9% increase year-on-year.
As the country progresses into 2025, the government continues to implement economic measures aimed at bolstering growth, including subsidies for young homebuyers and regional trade agreements to enhance exports.
The Serbian budget for January was in surplus, achieving a long-term target with an average net wage of €926 reported in December 2024.
Data released shows monthly inflation rates of 0.1% in December 2024 and 0.6% in January 2025, with year-on-year inflation at 4.3% and 4.6%, respectively.
These figures reflect a slight persistence of inflation exceeding the upper limit of the National Bank of Serbia's target range since April of the previous year.
Sector analysis reveals that in January 2025, year-on-year growth was noted in the manufacturing industry (2.6%) and mining (6.9%), while the energy supply sector, which includes electric power and gas, experienced a decline of 9.1%.
Compared to December 2024, after seasonal adjustments, production increased in total industry (0.7%), mining (1.8%), and energy supply (6.1%).
However, the manufacturing sector showed a decreased output of 0.3%.
The energy supply sector, contributing 15.3% to overall industrial production, has been on a recovery trajectory, although production levels remain approximately 5% lower than in January 2024, primarily due to adverse hydrological conditions.
Hydroelectric production in January and February 2025 fell by 31.6% and 31.9%, respectively, year-on-year, with significant decreases reported from specific hydroelectric plants including Đerdap, Bajna Bašta, Uvac, Kokin Brod, and Vrla.
In 2024, hydroelectric production dropped 20% compared to 2023, and by about 3.6% compared to the average output from 2019 to 2023.
Concerns regarding the long-term trends in industrial production are influenced by economic fluctuations among key trading partners in the Eurozone, with Germany's economic indicators remaining particularly weak.
Recent parliamentary elections in Germany have sparked optimism for potential fiscal reforms, though trade tensions with the United States pose risks, particularly targeting the European automotive and pharmaceutical sectors.
Maintaining political stability is deemed essential for supporting the growth trajectory of Serbia's industrial production.
Delays in launching new electric vehicle production at the FCA Serbia plant have been noted.
Stellantis, the parent company of FCA, is facing significant market challenges, with a 60% decrease in its share price over the past year.
Additionally, the looming possibility of sanctions affecting Serbia's oil industry, which is largely Russian-owned, could impact economic stability.
A recent extension of 30 days has been granted to finalize negotiations on this matter.
The company's performance is further impacted by the operational interruptions at the oil refinery in Pančevo, which experienced two months of maintenance last spring.
This refinery, part of the NIS group, supplies not only domestic needs but also caters to the regional market with various petroleum products.
In January 2025, Serbia's manufacturing sector reported growth in 11 out of 24 areas contributing to approximately 34% of the overall industrial production index.
The primary contributors to the manufacturing sector's growth included rubber and plastic products as well as coking and petroleum derivatives, while electronics and optical products also exhibited robust performance.
Notably, in 2024, the current account deficit reached €5.208 billion, marking an increase of 188.7% to €1.804 billion from the previous year.
This significant deficit results from a widening merchandise trade deficit, net income outflows from direct investments, and a reduction in net state income and remittances from abroad.
The net inflow of foreign direct investments (FDI) for January to December 2024 was recorded at €4.600 billion, an increase of 7.9% compared to the previous year.
The structure of these inflows indicates that ownership investments now account for 79.7%, while intercompany borrowing has decreased to 20.3%.
In December 2024, the current account deficit was €933.2 million, representing a 34.9% increase year-on-year.
As the country progresses into 2025, the government continues to implement economic measures aimed at bolstering growth, including subsidies for young homebuyers and regional trade agreements to enhance exports.
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