World Bank Raises Serbia's 2026 Growth Forecast to 3.1%
In its autumn Western Balkans report, the bank says this year's growth beats the spring forecast of 2.7%, while the fiscal deficit widens to 3.5% of GDP.
The World Bank expects Serbia’s gross domestic product (GDP) to grow 3.1% in 2026 and 3.7% in 2027, according to the Western Balkans Regular Economic Report published on October 27. In its spring projection the bank had assumed growth of 2.7% for this year, which means the forecast has been raised by 0.4 percentage points.
What drove growth in 2026?
The bank attributes the growth to the restart of production at the country’s only oil refinery, higher output at Stellantis (Fiat) in Kragujevac, strong exports and a recovery in the services sector. On the spending side, growth in the first half of the year was led mainly by higher consumption, alongside slowing inflation and a strong expansion of household lending.
Services were the main engine on the production side, construction showed early signs of recovery, and industrial output contributed very little to overall growth. Exports benefited from a rebound in the automotive industry.
Key figures from the report:
- Serbia’s GDP growth: 3.1% in 2026 and 3.7% in 2027, and roughly 3 to 4% a year over the medium term, driven mostly by consumption and, to a lesser extent, investment
- fiscal deficit in 2026: 3.5% of GDP, due to higher spending on wages, pensions and capital investment; overall public debt keeps falling
- unemployment rate: 7.2%, and 22% among young people
Why doesn’t falling unemployment mean rising employment?
The bank warns that the drop in unemployment to 7.2% partly reflects people moving from unemployment into inactivity, rather than a significant rise in employment. According to the report’s assessment, high youth unemployment points to a mismatch between citizens’ skills and what the labor market demands, and to limited job opportunities.
The report lists problems in the portfolios of large state-owned enterprises, limited progress on structural reforms, and global and domestic uncertainty as the main downside risks.
Aisha Williams, director of the World Bank Group office in Serbia, said:
“This year’s growth recovery in Serbia and solid macroeconomic results give reason for optimism. Our research often stresses the need for more structural reforms in Serbia to support the move toward a fully market-based economy aligned with the EU. Serbia should also strive to build an innovative and inclusive economy that offers quality, productive jobs to its citizens and allows the private sector to do business successfully. Such an economy, with better institutions and an improved business environment, would attract more of the private capital needed for future growth.”
How is the Western Balkans region doing?
For Albania, Bosnia and Herzegovina, North Macedonia, Serbia, Montenegro and Kosovo, the bank projects average growth of 3.1% in 2026, compared with 2.6% in 2025. In 2027 and 2028 it expects 3.4% a year.
Xiaoqing Yu, the World Bank’s director for the Western Balkans, said the region has once again shown resilience, but that this is not enough:
“Yet resilience alone is not enough to help this region converge with the average income of the European Union or to create the quality jobs its citizens need. Jobs are created by dynamic private sectors, and the next phase of growth requires efficient, predictable regulation and the removal of trade barriers, not only at borders but also behind them.”
The report backs this argument with figures. Trade in goods and services reached 107% of regional GDP in 2025, against an EU average of 90%, and services exports quadrupled between 2010 and 2025. The average tariff on imported goods is about 6%, but non-tariff measures add roughly another 10%, and over 20% in some agricultural sectors. Restrictions on cross-border provision of services cost 29%.
According to the report’s simulations, removing just half of the existing barriers to imports could raise regional GDP by up to 12.5% over the medium term. The bank also says that only about a third of new export ventures by Western Balkans firms survive their first year, and that just one to four percent of them reach a fifth birthday.
