FAZ: Dark economic times ahead for Serbia

Mass public discontent, sanctions against NIS, and the collapse of a foreign policy in which Vučić sought to be on good terms with all sides of the world—these are the reasons behind Serbia’s economic stagnation, writes Frankfurter Allgemeine Zeitung (FAZ).

Serbian President Aleksandar Vučić has never been under such pressure as he is today, FAZ assesses, as reported by Deutsche Welle (DW).

Part of Vučić’s problems, the newspaper writes, are economic in nature and are linked to the framework set by U.S. President Donald Trump.

“According to unanimous assessments by economists, Serbia’s economic growth will be halved in 2025; foreign investments have declined, and domestic consumption is slowing,” the paper writes, adding that Vučić is also concerned about ongoing student protests.

“In foreign policy, the wavering course of this EU candidate country is increasingly coming to a head—the fragile balancing act based on good relations with Moscow, Beijing, Washington, and Brussels. And this has serious consequences for the domestic economy,” FAZ adds.

U.S. Sanctions and the NIS Problem

U.S. sanctions are affecting Serbia’s Oil Industry (NIS), which is largely Russian-owned.

“The United States, which seeks to curb Russian energy exports and thus weaken Russia’s war economy, is demanding that Gazprom withdraw. But the Russians do not want to sell. This puts Vučić in a difficult position.”

Vučić attempted to avoid the problem by cultivating good relations with Trump. It is no coincidence, the newspaper assesses, that Trump’s son-in-law Jared Kushner was granted the right—through a special law—to build on the site of the former General Staff headquarters in Belgrade.

However, the deal collapsed when Kushner withdrew due to public protests and a lawsuit filed against Culture Minister Nikola Selaković.

“Kushner’s withdrawal was not the only problem. A few days later, the United States banned the import of tires from the Linglong factory in Zrenjanin, owned by Chinese investors (…) Serbian exports to the U.S. remain burdened by an exceptionally high tariff of 35 percent. This is unlikely to change, as the U.S. ranks Serbia among countries with major deficiencies in democracy, free elections, and the rule of law.”

In this situation, the Frankfurt daily writes, the news that the U.S. had approved NIS to operate without sanctions until January 23—allowing the Pančevo refinery to resume operations—was received with great relief by Serbian authorities.

Speculation has emerged that Hungarian Prime Minister Viktor Orbán may be behind the approval, reviving theories that Hungary’s MOL could purchase Gazprom’s shares in NIS. Abu Dhabi’s ADNOC has also been mentioned as a potential stakeholder.

The article recalls that Moscow reacted negatively to earlier signals that Serbia might nationalize NIS, with President Vladimir Putin reminding Serbia of its “obligations” under existing contracts.

“This is interpreted as a threat, as Russia extended Serbia’s gas supply contract by only three months, until the end of March 2026,” the newspaper writes.

Strained Relations on Multiple Fronts

“Relations between the two Orthodox ‘brotherly nations’ had already been strained when Moscow sharply criticized the sale of Serbian ammunition to Ukraine. This arms export, praised by the West, was completely halted by Vučić this summer, which industrial circles interpreted as a lack of reliability on Belgrade’s part,” FAZ adds.

The newspaper also notes that Belgrade’s relations with the European Union, its largest trade partner and investor, are strained—no new negotiation clusters were opened, and Vučić avoided attending the EU–Western Balkans Summit at the end of the year.

In addition, China has not announced any new economic activities in Serbia.

“Domestic protests against Vučić’s government, external economic pressure, a poor environment, and uncertainty—all of these have a negative impact on the economic development of this country of 6.5 million people,” the newspaper writes.

Grim Forecasts

The outlook is bleak, FAZ concludes: foreign investment halved, a downturn in the construction sector, weak domestic demand, and economic growth of only 2 percent in 2025.

For this year, growth is expected to be below 3 percent, although Serbia’s National Bank remains more optimistic, projecting 3.5 percent.