The International Institute for Middle East and Balkan Studies (IFIMES)[1], based in Ljubljana, Slovenia, regularly monitors and analyses political, economic and security developments in the Middle East, the Balkans and worldwide. In its latest report entitled “Serbia 2026: Economic breakthrough in an era of growing global and regional challenges”, IFIMES examines current economic and political trends in Serbia, drawing on projections by the International Monetary Fund (IMF) and taking into account changes in the global geopolitical landscape as well as the dynamics of economic realignment in Southeastern Europe. The following text highlights several key findings of particular relevance presented in this report.
According to available projections, 2026 has the potential to be the most economically significant year for the citizens of Serbia, set against a complex and tense political environment, both globally and domestically. This contrast between economic optimism and political realism reflects an increasingly prevalent phenomenon in contemporary international relations, whereby economic strength alone does not guarantee the stability of the international system.
IFIMES assesses that Serbia is presently experiencing a phase of relative economic consolidation, albeit within a framework of heightened geopolitical risks, characterised by the fragmentation of the global order, weakened multilateral structures and the growing role of power in international interactions.
Within this context, functional institutions, open dialogue and free elections constitute the only legitimate foundation for pursuing political change and articulating the will of citizens. Restoring trust in these mechanisms remains a crucial precondition for Serbia’s long-term stability and sustainable development.
The case studies of Venezuela and Greenland illustrate the impact of geopolitical changes on the stability and sovereignty of states. Venezuela’s example underscores the fragility of political legitimacy in post-electoral and post-conflict settings, where the formal transfer of power in the absence of broader societal support may generate long-term instability and fuel concerns among smaller states about potential interventions by major powers.
Greenland, meanwhile, illustrates a shift in strategic focus towards the Arctic and northern transport routes, where the interests of the United States, the European Union, Russia and China converge. The growing importance of critical raw materials signals a transition into a phase of “resource geo-economics”, in which control over rare minerals becomes a decisive factor in securing technological and military superiority.
Taken together, these global trends indicate that Serbia’s economic development can no longer be viewed in isolation from security and strategic challenges, as a policy of neutrality and balance now demands far stronger institutional and diplomatic capacities than in the past.
At the regional level, in 2026 Serbia will reach parity with Croatia (a member of the European Union) in terms of nominal GDP size, and by 2027 is expected to assume the position of the largest economy in Southeast Europe, thereby consolidating its standing as the central economic pillar of the Western Balkans. The durability of this status will hinge on the capacity to convert economic growth into inclusive and long-term sustainable development, while maintaining a continuous focus on macroeconomic stability, energy security and institutional resilience.
Global trends indicate that economic and security factors have become inextricably linked, with effective balancing now requiring more sophisticated political and strategic capacities than ever before.
According to International Monetary Fund projections[2], 2026 marks a pivotal moment in the regional economic hierarchy, as Serbia reaches nominal GDP parity with Croatia and by 2027 is expected to emerge as the largest economy in Southeast Europe. Real GDP growth for 2026 is estimated at between 3.0 and 4.0%, with inflation of approximately 3.2–4.0%, while the unemployment rate remains stable within the range of 8.4–8.8%. The fiscal deficit is projected to remain below 3% of GDP, public debt at around 46–47%, and the current account deficit at between –5 and –6% of GDP, reflecting investment-related imports and the trade deficit.
The IMF highlights the resilience of Serbia’s macroeconomic policies amid global uncertainty, while simultaneously cautioning against geopolitical risks, external instability and the need for structural reforms, particularly with regard to the political and investment climate.
Current state initiatives further reinforce Serbia’s strategic policy framework. Plans are in place to increase the state’s shareholding in the Oil Industry of Serbia (NIS) from 29.87% to over 34%, which would grant Serbia full control over key energy decisions, alongside preparations for investments aimed at ensuring the continued operation of the Pančevo Oil Refinery. Serbian President Aleksandar Vučić has pointed to the importance of energy security, the development of nuclear and modular power plants, accelerated reforms in the defence and police sectors, as well as the role of foreign direct investment, which exceeded EUR 3.5 billion in 2025. The stabilisation of the energy sector and the completion of major agreements, including the acquisition of NIS, are of crucial importance for the planned increase in pensions and the improvement of living standards.
Serbia’s structural strength does not stem from short-term cyclical movements, but rather from its demographic and market potential, a well-developed industrial base, export-oriented growth, strategic infrastructure and energy projects, as well as the continuous inflow of foreign direct investment.
By 2030, Serbia is projected to further expand its lead over Croatia and to significantly surpass Slovenia in overall economic size, thereby consolidating its role as the central economic pillar of the Western Balkans.
Overall GDP growth does not automatically translate into a corresponding rise in living standards. GDP per capita indicators show that Serbia continues to lag behind Croatia and Slovenia, European Union members that outperform the region in terms of income and quality of life. At the same time, infrastructure expansion over the past decade, including the construction of around 650 kilometres of expressways and motorways, has made a tangible contribution to economic development.
This configuration generates two parallel realities: economic growth and market size enhance Serbia’s political and investment standing, while domestic social challenges call for the careful alignment of development with a more equitable distribution of economic gains.
IFIMES identifies three potential development scenarios: (i) a baseline scenario – steady growth under manageable geopolitical risks; (ii) an optimistic scenario – accelerated growth driven by strategic energy projects and institutional reforms; (iii) a pessimistic scenario – destabilisation caused by geopolitical shocks, energy-related instability and a decline in investment.
IFIMES underscores that Serbia’s ability to transform quantitative economic growth into sustainable and inclusive social development will constitute a critical test of economic and social policies in the coming decade.
Serbia is entering a phase in which economic strength is becoming a pivotal strategic resource, while simultaneously bringing new responsibilities within a complex international order. The year 2026 marks the most favourable economic position the country has attained to date, but one unfolding in a far more demanding and unpredictable global environment. Against this background, the consolidation of economic power, alongside sustained investments in security and institutional resilience, represents a rational strategy for adapting to the evolving dynamics of international relations, where principles of power increasingly override formal norms.
At the same time, the structure of the Southeast European market is undergoing substantial transformation, with Serbia assuming the role of a central regional economic actor. The long-term sustainability of this position will depend on the country’s capacity to convert economic growth into inclusive and sustainable development, and to ensure that national economic strength remains compatible with a fragmented and multipolar global reality.
To preserve this new regional role, it is necessary to: maintain macroeconomic stability; accelerate structural and institutional reforms; align economic growth with social cohesion; and coordinate foreign policy in accordance with the complex multipolar architecture of international relations.
Ljubljana/Washington/Brussels/Belgrade, 13 January 2026
[1] [1]IFIMES - International Institute for Middle East and Balkan Studies, based in Ljubljana, Slovenia, has a special consultative status with the United Nations Economic and Social Council ECOSOC/UN in New York since 2018, and it is the publisher of the international scientific journal "European Perspectives." Available at: https://www.europeanperspectives.org/en
[2] IMF Executive Board Concludes the 2025 Article IV Consultation with the Republic of Serbia and Completes the First Review Under the Policy Coordination Instrument. Available at: https://www.imf.org/en/news/articles/2025/06/30/pr-25228-serbia-imf-concludes-2025-art-iv-consult-completes-1st-rev-policy-coor-instrument?utm_source=chatgpt.com
