The Vienna Institute for International Economic Research has indicated that Serbia is likely to experience a slowdown in GDP growth this year, alongside potential political changes, BGNES reports. The institute's economist for the Balkans, Branimir Jovanovic, stated that the final economic forecasts are still being prepared, but adjustments will be made to reduce Serbia’s growth expectations for 2025 while projecting an increase for the following two years. He attributed this revision to ongoing protests and expected political shifts, suggesting that a change in government could take place by late 2025 or early 2026, which may subsequently boost economic growth. Additionally, global economic uncertainties, particularly trade tensions, are influencing the outlook.

Meanwhile, Serbia’s central bank, the National Bank of Serbia (NBS), has been actively intervening in the foreign exchange market to stabilize the dinar against the euro. Over the first two months of 2025, the NBS sold a total of 745 million euros in foreign reserves, with net sales of 420 million euros in January and 325 million euros in February. This contrasts with its approach last year when it purchased 2.7 billion euros to strengthen the currency. The dinar has depreciated slightly to 117.2 per euro, and while further weakening is anticipated, Jovanovic noted that it is unlikely to exceed 117.5. He emphasized that despite the economic challenges, Serbia’s foreign exchange reserves remain at a solid level.

The Serbian government is expected to issue significant debt this year, with plans for up to 2 billion euros in Eurobonds, 2.1 billion euros in domestic bonds, and 3.1 billion euros in commercial borrowing. These measures could place additional strain on the country's already substantial public debt, particularly in relation to GDP. Since a decline in GDP automatically increases the debt-to-GDP ratio, concerns have been raised about Serbia’s ability to maintain fiscal stability. Notably, the government carried out two domestic bond issuances during recent protests.

Despite the economic pressures, Serbia’s fiscal position remains relatively stable. Jovanovic noted that while the budget deficit is expected to exceed previous estimates, it is unlikely to surpass 3 percent of GDP. Public debt is projected to rise by 1 to 2 percentage points but should remain below the 60 percent threshold. However, the country’s budgetary situation has been impacted by unplanned expenditures, including student loans, increased education salaries, tuition fee support, and sanctions imposed on the country’s energy sector. Given Serbia’s consultative agreement with the International Monetary Fund (IMF), which stipulates that public debt should remain below 50 percent of GDP, it remains to be seen whether this limit will be breached, as reported by Nova Ekonomiya.