Country Economic Forecasts > Serbia

After a 1.8% fall in 2014, GDP grew 0.9% on the year in Q2 2015 and then 1% in Q3, with October's 7.8% annual rise in industrial output pointing to a further quickening of growth in Q4. The pick-up has been achieved without any immediate return to inflation, which stayed at 1.4% in October, well below the 2.5-5.5% target. A further pick-up in growth to 1.5% in 2016 and 2% in 2017 is forecast.The steady pick-up in growth reflects ongoing IMF support that will allow the budget deficit to stabilise at about 3% of GDP, with inward investment financing a similar order of current account deficit.But relatively modest growth and higher inflation in 2016-18 reflect economic risks from the large external debt and still-fragile banking system, the need for further reform and asset sales to ensure the capital inflow needed to finance the current account. In addition, there is the possibility of setbacks to reform as the ruling Progressive Party tries to renew its mandate ahead of elections due in 2018.