Serbia GDP Q2 2021


Serbia: Economy grows at strongest pace in nearly two decades in Q2

August 2, 2021

A flash estimate showed that the economy accelerated from a 1.7% year-on-year expansion in the first quarter to a 13.4% surge in the second. This marked the quickest pace of growth since the fourth quarter of 2001 and beat market analysts’ expectations.

A detailed breakdown of components is not yet available, but high-frequency data suggests that the acceleration in growth was driven by a rebound in household spending. Retail sales growth skyrocketed on average in the quarter, partly thanks to a stellar reading in April and a double-digit expansion in May. This came on the back of a notable increase in mobility. Industrial production growth also shifted into a markedly higher gear in the quarter on average. Lastly, growth in merchandise exports jumped in the quarter, suggesting that the external sector also supported the headline reading.

The economy is forecast to grow robustly this year as the gradual relaxation of restrictive measures buoys private consumption and business activity. Softer movement restrictions abroad will boost the tourism sector, while healthier international trade levels should further support the economy. That said, uncertainty over the course of the pandemic amid the emergence of more infectious variants, coupled with some lingering domestic restrictions, clouds the outlook.

A full breakdown of national accounts data is set to be released on 31 August.

Commenting on the outlook, analysts at the EIU added:

“The near-term outlook remains generally positive, but there is a clear risk that the recent surge in Delta variant virus cases could spread to the Balkans, which would weigh on sentiment and activity over the second half of 2021. We are a little more cautious than official forecasters over medium-term growth prospects, given scarring effects from the pandemic (on the labor market, public finances and global trade) and structural weaknesses in Serbia's economy. We expect firm public investment growth, but are less sanguine about domestic private-sector capital spending.”

FocusEconomics panelists see GDP expanding 4.5% in 2021, which is down 0.1 percentage points from last month’s forecast, before growing 4.2% in 2022.


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Serbia GDP Chart

Serbia GDP Q2  2021

Note: Year-on-year changes of GDP in %.
Source: Statistical Office of the Republic of Serbia (SORS) and FocusEconomics Consensus Forecast.

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