Serbia Outlook | Outlook weakened due to both local and global factors
CEE Macro Outlook , 14. März
Recent confirmation of 4Q24 GDP estimate at 3.3% y/y wrapped up FY24 real GDP growth at a solid 3.9% y/y. Meanwhile, the outlook for 2025 has slightly deteriorated. Local political instability, global geopolitics, stubborn inflation are all factors which could take a bite into headline GDP in 2025. The economy is still forecasted to see solid growth, albeit the number is 0.7pp weaker than we expected a quarter ago.
Inflation continues to float around the upper bound of the NBS target range in recent months. While normalization of price developments is a bit slower in Serbia, compared to other regional and peer countries, we expect inflation will again fall below 4% y/y in 2H25. Monetary policy remains tight, and we see rising risks of slower easing pace than previously envisaged.
Refinancing activities should remain relatively well diversified, including a Eurobond issuance (up to EUR 2bn), domestic issuance (up to EUR 2.1bn) and loans from commercial sources (up to EUR 3.1bn). Regarding expected timeline, we don’t expect foreign issuance in 1H25.
Political situation in Serbia is not settling down. Students’ protests continue, with support from the community remaining substantially high. Even the resignation of the Prime Minister had almost no effect on the intensity of the, now already a three-month long protests and blockades. From the current perspective, it doesn’t seem likely that we will get a quick resolution of the conflict and see high risks of protests dragging on throughout 1H25.
Inflation continues to float around the upper bound of the NBS target range in recent months. While normalization of price developments is a bit slower in Serbia, compared to other regional and peer countries, we expect inflation will again fall below 4% y/y in 2H25. Monetary policy remains tight, and we see rising risks of slower easing pace than previously envisaged.
Refinancing activities should remain relatively well diversified, including a Eurobond issuance (up to EUR 2bn), domestic issuance (up to EUR 2.1bn) and loans from commercial sources (up to EUR 3.1bn). Regarding expected timeline, we don’t expect foreign issuance in 1H25.
Political situation in Serbia is not settling down. Students’ protests continue, with support from the community remaining substantially high. Even the resignation of the Prime Minister had almost no effect on the intensity of the, now already a three-month long protests and blockades. From the current perspective, it doesn’t seem likely that we will get a quick resolution of the conflict and see high risks of protests dragging on throughout 1H25.