RS: 1Q25 real GDP growth confirmed at 2% y/y

Detailed release confirmed Serbian economy grew by 2% y/y at the start of 2025. Detailed structure shows largely anticipated momentum, with domestic demand still in the driving seat, albeit clearly losing steam. Household spending, after growing above 4% y/y in 2024, shows just 1.7% y/y growth in early 2025, despite still solid wage and credit growth. Its contribution to the headline figure was 1pp. Public spending was disappointing, showing barely any real growth (0.1% y/y). Investments were probably the largest negative surprise, as they contracted 0.2% y/y, hence the first negative output since 4Q20. Replenishment of inventories, and probably weaker than anticipated demand led to a boost in overall inventory stock, which in the end was the biggest positive contributor to headline growth, adding 4.1pp. On the external side, despite a net negative headline contribution of 3pp, exports surprised to the upside, showing 7.5% y/y growth. Given relatively weak trade balance figures, it is reasonable to assume most of the growth came from the service side. Imports again recorded double-digit growth, rising 11.5% y/y.