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Serbia’s Robust Post-Pandemic Recovery Jeopardized by Global Crises

BELGRADE, 4 May 2022 – Serbia’s economic growth will slow this year as several global crises, including the war in Ukraine, take their toll on the world economy. GDP growth in Serbia is projected to slow to 3.2 percent in 2022, despite a previous forecast of 4.4 percent, according to the Western Balkans Regular Economic Report released today.

Serbia rebounded strongly from the impact of the COVID-19 pandemic, posting real GDP growth of 7.4 percent in 2021, which was driven by strong private consumption and investment. The repercussions of the war in Ukraine, however, are weighing on Serbia’s exports, foreign direct investment, remittances and tourism revenues.

According to the report, Serbia will maintain macroeconomic stability despite prominent downside risks that could materialize in 2022. Raising inflation is likely to accelerate further, as in other countries in Eastern Europe, fueled by increases in global food and energy prices. The fiscal deficit could be higher than projected due to the slowdown in growth and greater amounts of public funds that will need to prop-up crisis-hit power and gas companies, in the form of subsidies and guarantees.   

“Over the medium-term the Serbian economy is expected to grow steadily at around 3 percent annually, similar to growth levels achieved before the pandemic,” said Nicola Pontara, World Bank Country Manager for Serbia. “This outlook crucially depends on external factors, such as the ongoing war in Ukraine and the global energy crisis, but also on the pace of Serbia’s internal reforms to put state-owned enterprises on a solid financial footing.” 

Similar to Serbia, growth projections were adjusted for all economies of the Western Balkans. Growth in the region is now forecast at 3.1 percent in 2022.

“Despite a strong rebound from the pandemic, the Western Balkans now face a new set of challenges, compounded by the war in Ukraine, including rising energy and food prices, high inflation, and slowing trade and investment,” said Linda Van Gelder, World Bank Country Director for the Western Balkans. “Careful policy support will be needed to navigate the Western Balkans through these crises and protect the important gains made in 2021, including poverty reduction.”

The report argues that sustained growth cannot happen in the Western Balkans without structural reforms to boost productivity, increase competition, invest in human capital, and strengthen governance. Measures to reduce business regulatory costs, increase market competition, support labor market participation, and strengthen the independence of public institutions would all be supportive of growth in an uncertain environment.

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Gordana Filipović
Paul Clare
+1 (703) 870 1674


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