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INTERVIEW - World Bank sees Serbia's growth doubling with key reforms Valentina Bajic 6–7 minutes _____ "Even at 2.8 per cent growth for 2025, Serbia will be growing faster than the EU average [...] Serbia's economy has significant potential, and with the right structural reforms—particularly to strengthen governance, boost human capital, and unlock greater levels of productivity—then the country's growth rate could be as much as doubled in the years ahead," Record told SeeNews in an emailed interview last week. Serbian economy's 'lost momentum' In the latest edition of its Western Balkans Regular Economic Report, published in October and produced by a team co-led by Record, the World Bank said <https://seenews.com/news/world-bank-cuts-serbias-2025-growth-forecast-as-momentum-falters-1282848> that Serbia's economy "has lost momentum" in 2025, due to lower private investment and net FDI inflows amid global uncertainty and domestic political instability. The 2.8% GDP growth forecast for 2025 is 0.7 percentage points below the World Bank's June projection <https://seenews.com/news/world-bank-keeps-serbias-2025-2026-growth-fcasts-1276743> and comes amid a wave of downward revisions for Serbia's economic growth this year by other financial institutions, including the International Monetary Fund <https://seenews.com/news/imf-slashes-serbias-economic-growth-forecast-for-2025-2026-1283266> and the European Bank for Reconstruction and Development <https://seenews.com/news/ebrd-cuts-serbias-2025-economic-growth-forecast-to-2-5-percent-1282182> . Record told SeeNews that Serbia's economic performance has been impacted by weakening global business confidence, especially in Europe's advanced economies, which is significant for the Western Balkan country due to its strong trade and investment ties with major EU economies like Germany and Italy, especially in manufacturing. This, coupled with domestic uncertainty <https://seenews.com/news/huge-anti-government-protest-in-serbia-marks-anniversary-of-novi-sad-tragedy-1284304> , led to a sharp slowdown in private investments, particularly FDI <https://seenews.com/news/net-fdi-inflow-to-serbia-slumps-54-percent-yy-in-jan-aug-1283535> , Record said, noting that although consumption and production have shown some resilience, consumer confidence has also been shaken by rising food prices <https://seenews.com/news/serbias-inflation-eases-in-sept-as-retail-margin-cap-takes-effect-1283153> after another weak agricultural season. Serbia's economy grew by an average of 2% <https://seenews.com/news/serbias-q2-gdp-growth-revised-slightly-up-to-2-1-percent-1280990> in the first half of the year, according to data from the country's statistics office. In a flash estimate <https://seenews.com/news/serbias-gdp-growth-slows-to-2-percent-yy-in-q3-flash-data-1284251> published at-end October, the statistics office said that Serbia's GDP grew by 2% on the year in the third quarter, with more information on the performance of the economy in the three months through September expected on December 1. U.S. sanctions on NIS Apart from prolonged external and domestic uncertainty, Serbia's economy faces another hurdle - the country's sole refiner NIS <https://seenews.com/news/serbias-sole-oil-refinery-to-continue-operating-until-nov-25-minister-1284125> , indirectly controlled by Russia's Gazprom, was hit by U.S. sanctions that took effect <https://seenews.com/news/serbias-sole-refiner-nis-denied-new-u-s-sanctions-waiver-1282972> last month. Record told SeeNews that it is too early to assess how the sanctions may impact the country's economy in the long term. "But clearly any disruption to Serbia's energy infrastructure and access to key trade and investment partners would likely be disruptive to short-term economic activity," he said. "These events also underscore the importance for Serbia, similar to other European economies, in continuing along the path of energy decarbonization and the broader green transition," Record noted. Boosting Serbia's export performance According to the most recent figures from Serbia's central bank, the country's current account deficit <https://seenews.com/news/serbias-ca-gap-expands-31-percent-yy-in-jan-aug-1283534> rose by an annual 31% in the first eight months of 2025, reaching 2.7 billion euro ($3.1 billion). In January-August, the deficit in trade of goods rose by 4% on the year to 4.5 billion euro, while the surplus in trade of services narrowed by 20% to 1.3 billion euro. Asked about the policy measures that Serbia needs to implement to strengthen its export performance to narrow the current account gap, Record explained that the country's export outcomes are at any given time influenced by both cyclical and structural factors. Cyclical factors, including business confidence and the strength of demand in key export markets such as the EU, are largely outside of the control of Serbia's policymakers, Record stated. However, several measures could be implemented, he noted, to strengthen the fundamentals of Serbia's export competitiveness through structural reforms. For example, Record pointed out, infrastructural and regulatory reforms at the border would help reduce the costs of trade facilitation; financial sector reforms, including through integration into the Single Euro Payments Area <https://seenews.com/news/serbia-joins-sepa-1275725> , would help reduce the costs of international payments; strengthening market competition and governance to ensure a level playing field between private and state-owned enterprises would help boost domestic investor confidence, and reforming the educational system is key for ensuring future-ready skills in the workforce, particularly given key economic shifts such as the green transition and the increasing role of artificial intelligence. Serbia's transition to an 'innovation-driven economy' Nicola Pontara, World Bank country manager for Serbia, said <https://seenews.com/news/world-bank-cuts-serbias-2025-growth-forecast-as-momentum-falters-1282848> in a document accompanying the Western Balkans Regular Economic Report that escaping the middle-income trap requires transitioning to an innovation-driven economy that increases productivity and enables domestic firms to join EU and global value chains. For Serbia, this would mean attracting FDI in greenfield and higher-value-added sectors, increasing spending on R&D and boosting human capital across the life cycle, according to Pontara. Asked about how the World Bank can support Serbia in switching to an innovation-driven economy, Record told SeeNews that the World Bank's current Country Partnership Framework for Serbia, which runs from 2022 to 2026, aims to support greener and more resilient growth as well as more inclusive service delivery. He highlighted projects that support Serbia's innovation system and the transport sector, as well as an analysis that sets out a set of policy messages on fiscal policy to help Serbia prepare for the transition to a high-income economy. Record also noted that the World Bank, through its private sector arms—the International Finance Corporation and the Multilateral Investment Guarantee Agency—extends financing to the private sector, aiming to create more and better jobs. "Across all of these areas, we stand ready to do more in support of Serbia's economic and social transition, particularly as the country looks towards becoming an EU member state," Record stated. ($ = 0.871 euro) -- http:www.antic.org --- You received this message because you are subscribed to the Google Groups "SERBIAN NEWS NETWORK" group. To unsubscribe from this group and stop receiving emails from it, send an email to [email protected]. 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