Serbia cuts 2025 GDP forecast to 2.75 pct on weaker agriculture, uncertainty
National Bank of Serbia (NBS) Governor Jorgovanka Tabakovic said second-quarter growth was weaker than expected, with early data showing lower wheat and fruit output and smaller sown areas for autumn crops.
"Unfavourable weather conditions, first frost in spring and then extreme heat and drought in June, significantly reduced yields of many fruit crops, whose prices recorded a sharp increase," Tabakovic said at the presentation of the August Inflation Report on Wednesday.
The NBS expects activity to accelerate in the second half of the year, supported by further growth in the automotive industry, higher exports, and infrastructure projects under the "Leap into the Future - Serbia Expo 2027" program. Announced by President Aleksandar Vucic in January 2024, the program involves an investment of 17.8 billion euros (about 20.8 billion U.S. dollars) over the next three and a half to four years for projects across the country, including preparations for Expo 2027.
The NBS also projected growth of 4-5 percent in 2026 and 2027, with the upper range likely in 2027 due to the Expo's boost to services and net exports.
Inflation rose to 4.9 percent in July from 4.6 percent in June, driven by higher unprocessed food and oil prices. The bank expects it to stay near the upper bound of its target range through year-end before easing in 2026.
Economic growth in the second quarter stood at 2.0 percent year-on-year, supported by services and manufacturing but offset by declines in construction and energy.
In the first half of the year, exports rose 10.8 percent year-on-year, led by automotive-related manufacturing, while imports grew 11.4 percent on higher purchases of raw materials and consumer goods. The current account deficit reached 4.7 percent of GDP, with foreign direct investment inflows of 1.5 billion euros, down 40 percent from the same period last year but expected to strengthen in the second half.
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