Economic growth accelerates in the fourth quarter of 2025

GDP growth gained momentum in Q4: Serbia's GDP expanded 2.2% on a year-on-year basis in Q4, up from a 2.0% expansion in Q3 and in line with the flash estimate. Q4's reading was the strongest since Q4 2024. On a seasonally adjusted quarter-on-quarter basis, GDP expanded 1.0% in Q4, following a 0.7% expansion in the previous quarter. For 2025 as a whole, GDP growth slowed to 2.0% from 3.9% in 2024, marking the weakest rate since the pandemic-induced downturn in 2020.

Domestic demand drives economic growth: Compared with the prior period's data, readings in Q4 improved for private consumption (+3.7% on a year-on-year basis vs +3.5% in Q3), government consumption (+4.2% vs +3.8% in Q3), fixed investment (+8.9% vs -2.2% in Q3), exports of goods and services (+5.3% vs +4.2% in Q3) and imports of goods and services (+7.6% vs +4.8% in Q3). Meanwhile, looking at a breakdown by production, the industrial sector contracted for a third consecutive quarter, reflecting the impact of U.S. sanctions on the Russia-owned oil company NIS. More positively, construction was a key driver of Q4 GDP growth, supported by early preparations for EXPO 2027 and major infrastructure works such as the Morava Corridor motorway. GDP growth was also aided by gains in professional and business services.

GDP growth to rise in 2026: Our Consensus is for economic growth to strengthen in Q1 2026 from Q4. For 2026 as a whole, our panelists expect growth to accelerate from 2025, driven by stronger growth in private consumption and fixed investment amid lower interest rates, employment gains and infrastructure spending linked to Expo 2027 Belgrade. Future U.S. sanctions on Serbia are a key factor to watch, with the U.S. extending in March the sanctions waiver to NIS until 17 April.

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