The economic growth in Southeastern Europe (SEE) slowed significantly in 2024, reflecting weaker-than-expected external demand, sluggish investment activity, and limited fiscal stimulus. The average growth rate in the region declined from 2.3% in 2023 to 1.5% in 2024, with projections of a modest rebound to 2.1% in 2025 and 2.4% in 2026, according to the European Bank for Reconstruction and Development’s (EBRD) latest Regional Economic Prospects report.
The slowdown in global trade and investment fragmentation has negatively impacted the region, particularly affecting trade flows, foreign direct investment (FDI), and supply chains. Additionally, the deteriorating economic outlook in advanced European economies, particularly Germany and Italy, has reduced demand for exports from SEE countries, further dampening growth prospects.
Country-Specific Developments
Albania: Economic growth remained strong at 4.0% in 2024, supported by tourism and construction. However, weaker demand in Italy and Greece could impact future growth.
Bosnia and Herzegovina: Growth slowed to 2.5% in 2024, but an improvement to 2.8% in 2025 is anticipated, driven by public investment.
Bulgaria: GDP growth in 2024 was 2.3%, supported by domestic demand and stable EU-funded investments. Growth is projected to reach 2.4% in 2025 and 2.8% in 2026, below prior forecasts, reflecting weaker external demand and high borrowing costs. Inflation has moderated but remains a concern, particularly as real wage growth outpaces productivity.
Croatia: GDP grew 3.8% in 2024, driven by tourism and private consumption. Growth is expected to moderate to 3.0% in 2025 and 2.6% in 2026, reflecting slower investment inflows and external demand weakness. Inflation remains elevated, though energy price stabilization provides some relief.
Greece: Economic expansion was 2.3% in 2024, unchanged from the previous year. Growth is expected to remain stable at 2.3% in 2025 and 2026, supported by tourism, services, and EU recovery funds. Investment remains constrained due to high-interest rates and structural inefficiencies in the banking sector.
Moldova: The country experienced 0.6% growth in 2024, one of the weakest in the region, reflecting trade disruptions and high inflation. Growth is forecasted to recover to 2.0% in 2025 and 3.8% in 2026, assuming improved trade ties and policy stability. Inflation has declined but remains a key challenge for households and businesses.
Montenegro: Growth dropped to 3.1% in 2024, down from 6.3% in 2023, reflecting a slowdown in foreign direct investment (FDI).
North Macedonia: GDP expanded 2.6% in 2024, with a forecasted rise to 3.0% in 2025, supported by exports and foreign investment.
Romania: The Romanian economy slowed sharply from 2.4% in 2023 to 0.8% in 2024, mainly due to weak export demand, political uncertainty, and tight fiscal policies. Growth is expected to recover to 1.8% in 2025 and 2.4% in 2026, but inflation remains high, limiting real income gains. The government is under pressure to tighten fiscal policies, further restraining domestic consumption.
Serbia: Growth was 4.0% in 2024, expected to remain stable in 2025, benefiting from strong private sector activity and digitalization initiatives.
Slovenia: Growth slowed to 1.4% in 2024, impacted by weak export demand from key trading partners. The economy is projected to recover gradually to 2.0% in 2025 and 2.4% in 2026. Government investment in digital infrastructure and green energy is expected to support long-term growth.
The economic outlook for Southeastern Europe remains challenging, with subdued growth forecasts for 2025 and 2026. The region faces structural weaknesses, high inflation, and external shocks from global trade fragmentation and geopolitical uncertainty. While fiscal consolidation and EU integration efforts offer potential long-term benefits, short-term growth remains fragile and highly dependent on external demand and investment inflows.
