Serbia’s economy to grow 3.5-4% in 2026-2027 – Allianz Trade
Serbia’s economic growth is expected to quicken to 3.5-4% in 2026 and 2027 from an estimated 2.1% increase in 2025, global trade credit insurer Allianz Trade said.
“Private consumption should remain resilient, supported by wage growth and easing inflation, but tighter labor market conditions and slowing productivity gains may cap momentum. Public investment continues to act as a short-term growth anchor, yet its import-intensive nature reduces net domestic spillovers,” Allianz Trade said in its annual research Country Risk Atlas 2026 published on Monday.
Serbia’s medium-term growth potential is also supported by strategic infrastructure and energy projects ahead of the EXPO 2027 international exhibition to be held in Belgrade and linked with the country’s diversification efforts.
“Inflation is expected to remain within target, allowing for cautious monetary easing, though renewed food or energy price shocks could reintroduce volatility,” Allianz Trade said, adding external demand remains a mild drag, given weak performance of Serbia’s key European partners.
In September, the Serbian government imposed a six-month cap on retail margins on staples and basic goods at 20%, aiming to ease inflation pressures. As a result, annual consumer price inflation gradually slowed to 2.7% in December from August’s 4.7%. The central bank has said annual inflation is expected to remain within the 1.5-4.5% target range in the short term.
Allianz Trade noted that Serbia’s cyclical risks are manageable but could tilt to the downside if global financial conditions tighten or domestic confidence weakens ahead of key political milestones. It added that the financing profile of the country benefits from improved market credibility, declining public debt and continued access to domestic and international funding, supported by investor appetite for dinar- and euro-denominated debt.
“However, risks are rising at the corporate level. High interest rates over 2023-2024 and slowing demand have strained liquidity among SMEs, particularly in construction, transport and trade-related sectors. Insolvency filings and restructuring requests have increased modestly, reflecting delayed payment cycles and higher refinancing costs,” according to the report.
It said that the banking sector remains well-capitalized, but smaller firms and households faced tightening credit terms. Additionally, the current account deficit relies on sustained FDI inflows to offset import-heavy investment. “Any slowdown in foreign capital or adverse geopolitical developments could increase refinancing pressures and currency sensitivity, though reserves provide a buffer.”
On the political front, Serbia’s foreign policy is marked by balancing between hopes for EU accession and close ties with Russia and China, which “adds strategic ambiguity, exposing the country to shifting external pressures”. In addition, unresolved tensions with Kosovo continue to pose episodic security and diplomatic risks.
At the same time, domestic politics have remained dominated by prolonged protest against incumbent politicians with increasing medium-term succession and institutional risks, Allianz Trade said, adding that public opposition to mining and energy projects, particularly lithium, has the potential to intensify social unrest and delay strategic investments.
“Ahead of EXPO 2027, political incentives favor continuity and stability, yet reform momentum may weaken as authorities prioritize project delivery over governance improvements. Overall, political risks are unlikely to derail growth but continue to weigh on long-term predictability,” Allianz Trade said.
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