GDP grows at softest pace in over a year in Q3 2024

Economic growth decelerates: A second release confirmed that GDP growth lost steam, falling to 3.1% year on year in the third quarter from 4.2% in the second quarter and marking the worst reading since Q2 2023. On a seasonally adjusted quarter-on-quarter basis, economic growth slowed to 0.5% in Q3 from the previous period's 0.9% growth, marking the joint-worst result in two years.

Spending and external sector drive the deterioration: Private consumption increased 3.9% in the third quarter, which was below the second quarter's 4.7% expansion. Moreover, government spending growth was the slowest in a year, expanding 2.6% (Q2: +4.6% yoy). On the flip side, fixed investment growth picked up to 9.1% in Q3, following the 7.8% expansion recorded in the prior quarter, likely aided by the start of ECB monetary policy easing in June. Meanwhile, the external sector detracted more from the headline reading than in Q2. Exports of goods and services increased 3.2% on an annual basis in the third quarter, which was below the second quarter's 4.6% expansion. Conversely, imports of goods and services growth sped up to 14.4% in Q3 (Q2: +8.4% yoy).

Growth to strengthen slightly ahead: Our panelists expect the economy to gain some traction in Q4 and expand at a slightly faster clip overall in 2025 compared to 2024, aided by the ongoing monetary policy easing cycle, moderating price pressures and healthier external demand.

Panelist insight: Mate Jelic, analyst at Erste Bank, commented: “Serbia’s strong economic momentum with growth rates around 4% y/y appears sustainable in the medium term. Growth is domestically driven, with robust labour market and real wage gains supporting household consumption and public investment cycle underpinning overall investment activity.”

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