Raiffeisen Bank has raised Serbia’s gross domestic product (GDP) growth forecast for this year from 2.8% to 3.3% year-on-year, driven by a low base effect from the second half of last year, robust personal consumption and a recently announced €980 million financial aid package for adult citizens.
At the same time, analysts leave room for growth to exceed the revised projection, according to the bank’s latest economic report.
“Despite turbulent geopolitical developments and a continued decline in foreign direct investment (FDI) inflows, the domestic economy has proved more resilient than initially anticipated by both market participants and policymakers. As a result, GDP growth accelerated to 3.8% year-on-year in the second quarter, following 3.2% growth in the first quarter,” the analysis states.
Growth in the second quarter was supported by strong domestic demand – fuelled by rising wages, pensions, remittances from abroad and lending activity – alongside a favourable agricultural season, higher exports of electric vehicles by Stellantis and ongoing public investments linked to EXPO infrastructure projects.
Personal consumption remained the primary driver of economic growth, although its growth slowed to 4.0% year-on-year in the second quarter, down from 4.9% in the first quarter. Government consumption also experienced a moderate slowdown to 2.5% year-on-year, following 5.1% growth in the first three months of the year, likely reflecting the delayed impact of earlier public sector wage and pension increases implemented in January.
Sector performance and inflation outlook
From the production side, the largest contributions to economic growth came from agriculture – which surged by a double-digit 12.1% year-on-year, following an equally robust 11.6% growth rate in the first quarter – and construction, which rebounded with 9.1% year-on-year growth in the second quarter following a 9.7% contraction in the first three months.
Agriculture is currently facing a period of elevated temperatures and low rainfall, which is likely to result in lower maize and soybean yields. However, the report notes that it is still too early for definitive assessments, as the autumn harvest is not yet complete.
“Given that agriculture accounts for only about 3% of GDP, we expect the drought to have a modest, one-off negative impact on economic growth in the third quarter, followed by a recovery in the fourth quarter,” the report adds.
However, Raiffeisen Bank analysts warn that, from a long-term perspective, the sustainability of Serbia’s existing GDP growth model remains a key concern, as growth increasingly relies on personal consumption and state investment while FDI inflows remain relatively subdued. Once the investment cycle associated with the EXPO 2027 project and infrastructure spending concludes, Serbia’s medium-term growth potential could decelerate to between 2% and 3% annually, unless productivity gains, private sector investment and exports step in to drive growth. Consequently, the risks to medium-term GDP growth are primarily structural rather than cyclical.
Regarding consumer price growth, the bank’s experts maintain their earlier projection of 5.1% inflation by year-end. Inflation rose by 0.5% month-on-month in August, following a 0.2% decline in July, driven primarily by a 0.4% increase in food and non-alcoholic beverage prices and a 1.7% rise in transport costs due to higher fuel prices.
This August price increase pushed annual inflation up to 2.2% year-on-year from 1.9% in July. Nonetheless, inflation remains relatively subdued, supported by favourable base effects and a 6.3% year-on-year drop in food and non-alcoholic beverage prices.
Monetary policy outlook
On monetary policy, the baseline scenario projects the benchmark interest rate to remain at 5.75% throughout 2026, with current risks favouring a prolonged restrictive stance rather than any easing.
These risks include oil and energy price volatility due to uncertainties surrounding the conflict in Iran, stronger wage and domestic demand growth stemming from the €980 million citizen support package, and an unstable global environment, Raiffeisen Bank’s economic report concludes.
(Biznis.rs, 17.09.2026)
https://biznis.rs/vesti/srbija/raiffeisen-banka-podigla-prognozu-privrednog-rasta-srbije-sa-28-na-33-odsto/
