Serbia Foreign Direct Investment (EUR bn)

Foreign Direct Investment in Serbia

After the economy expanded 0.4% year on year in Q4, a flash estimate points to 0.7% GDP growth in Q1. While a detailed breakdown has not yet been released, growth in industrial production and tourism turnover likely supported the reading. On the contrary, retail sales declined in annual terms in Q1 amid stagnant real wages and higher interest rates. In Q2, still-high inflation and the lagged effects of rate hikes will continue to temper economic momentum. In other news, the preliminary acceptance of Kosovo’s request for membership of the Council of Europe—a human rights body—in late April is likely to increase political tensions with Serbia. Talks between the two countries in early May did not lead to a breakthrough; the normalization of ties with Kosovo is key to Serbia’s EU accession hopes.