RS: Real GDP rose 3.8% y/y in 2024

According to a flash estimate from the Statistical Office, the Serbian economy grew by 3.3% y/y in 4Q24, which was slightly below our estimate. That figure suggests FY24 rela GDP at 3.8% y/y. While detailed structural performance data is yet to be released, it is likely that the trend observed in previous quarters, meaning strong domestic demand output and external weakness, continued in the last quarter of the year as well.

Growth is domestically driven, with robust labour market and real wage gains (around 9% y/y in 2024) supporting household consumption. Meanwhile solid public investment partly reflects preparations for the Expo 2027. On the external side, pressures observed in 2024 will likely continue in the mid-term as external demand from key EA countries remains weak, while the surge in investment is import-heavy. That said, risks to growth forecasts have recently shifted slightly to the downside. Latest GDP releases for the EA countries confirmed underlying weakness continued in core countries at the end of 2024, while on the domestic side we can observe a slowdown in retail activity. Sentiment is also weakened by the threat of global tariff war. Meanwhile, ongoing protests in Serbia which resulted with a resignation from the PM could cause a delay in the implementation of planned Expo projects and thus weaken the expected 2025 GDP figure. We put our GDP forecasts under review until the release of detailed 4Q24 performance but highlight some downside risks to earlier 4.5% y/y and 4.3% y/y calls for 2025 and 2026 respectively.