The National Bank of Serbia (NBS) has opted to maintain its benchmark interest rate at 5.75% for the sixth consecutive month, amid mounting political unrest and lingering inflationary pressures. The decision, announced on Thursday, aligns with expectations from a majority of economists surveyed by Bloomberg, where 14 out of 16 participants predicted no change. However, two economists had anticipated a quarter-point rate cut.
This decision comes amid widespread political protests, described as the largest in the country in over a decade, which have added uncertainty to the economic landscape. At the same time, inflation remains a key concern, hovering at the upper end of the central bank’s target range of 1.5% to 4.5%. In February 2025, Serbia’s annual inflation rate eased slightly to 4.5%, down from a nine-month high of 4.6% in January.
Price increases showed mixed trends across sectors. On one hand, there was a slowdown in price growth for housing and utilities (3.4% vs. 3.5% in January), transport (2.3% vs. 3.5%), health (5.4% vs. 5.5%), restaurants and hotels (9% vs. 9.4%), and miscellaneous goods and services (4.1% vs. 4.4%). On the other hand, costs accelerated for food and non-alcoholic beverages (4.3% vs. 4.1%), alcoholic beverages, tobacco, and narcotics (7.7% vs. 7.6%), clothing and footwear (5.6% vs. 4.8%), communication (4.5% vs. 4.4%), and recreation and culture (4.5% vs. 4.2%). On a monthly basis, consumer prices edged lower to 0.5% in February 2025, compared to 0.6% in January.
Serbia’s economy grew by 3.3% year-on-year in the fourth quarter of 2024, matching the preliminary estimate and the revised figure from the previous quarter. Household consumption (+3.8%) and gross fixed investment (+1.2%) were the primary drivers of growth, while government spending contracted slightly by 0.3%. Externally, exports rose by 3.1%, but imports surged by 7.1%, reflecting strong domestic demand.
Sector-wise, the strongest growth was observed in wholesale and retail trade, transportation, accommodation, and food services (6.0%), information and communication (9.8%), and industry, water supply, and waste management (3.5%). Conversely, agriculture, forestry, and fishing saw a contraction of 7.6%, and construction declined by 5.5%. On a seasonally adjusted quarterly basis, Serbia’s GDP expanded by 1.1% in Q4 2024, following a 0.5% increase in the previous quarter.
