Economic growth picks up in Q4

Economic growth gains momentum, as expected: According to flash estimates, Serbia's GDP increased 2.2% on a year-on-year basis in Q4, following 2.0% growth in the prior quarter. Q4’s reading was the strongest of 2025 and broadly in line with our panelists’ expectations.

Private spending likely a key driver: Absent a detailed breakdown, available data suggests private spending gathered pace in Q4: Retail sales growth accelerated to its strongest rate since Q2 2024, and wage growth averaged slightly above Q3’s pace, which—together with lower inflation compared to Q3—likely provided support to household spending. Meanwhile, goods export growth remained solid. On the downside, industrial output shrank for the first time since Q3 2022, reflecting the impact of U.S. sanctions on Russia-owned oil company NIS.

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 private consumption and fixed investment growth amid lower interest rates, employment gains and infrastructure spending linked to Expo 2027 Belgrade. While the U.S. has granted a sanctions waiver to NIS until 20 March, future U.S. sanctions are a key factor to watch.

Panelist insight: Commenting on the outlook, Erste Bank analysts said: “Serbia’s growth model in 2026 is expected to remain internally driven rather than export led. […] The main engine of growth is likely to be domestic demand, particularly private consumption supported by employment gains and real income growth. Investment should be an important contributor as well, driven by infrastructure projects, manufacturing capacity expansion, and energy-related investments. […] Upside risks mainly stem from stronger investment execution related to the EXPO 2027 and faster productivity gains.”

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