S&P Global Ratings Expected to Maintain Serbia's Investment Grade Status

S&P Global Ratings Poised to Affirm Serbia's Investment Grade

S&P Global Ratings is widely expected to uphold Serbia's investment grade credit rating, a significant financial benchmark it first bestowed upon the country last year. This projection comes from analysts at Erste Group, ahead of S&P's scheduled review for Serbia on October 3, 2025.

Historic Upgrade and Economic Foundations

Serbia achieved its inaugural investment grade rating of 'BBB-' with a stable outlook from S&P Global Ratings on October 4, 2024. This upgrade marked a historic moment, elevating Serbia from its previous 'BB+' rating and positioning it as the first country in the Western Balkans and the sole EU candidate nation to attain investment-grade status.

The decision by S&P last year was underpinned by several key factors, including:

• Strong domestic demand and robust economic growth, with real GDP projected to expand by 4% in 2024 and in the subsequent years.
• Prudent macroeconomic policies and increased resilience to external shocks.
• A reduction in the current-account deficit and record-high foreign exchange reserves.
• Moderate public debt levels and a credible macroeconomic policy framework.

Implications for Investment and Future Outlook

Maintaining an investment grade rating is crucial for Serbia's economic trajectory. It is anticipated to lead to lower borrowing costs for the government and businesses, enhance access to international capital markets, and significantly bolster investor confidence. This status signals to global investors that Serbia is a stable and attractive destination for investment, with a lower perceived risk.

While the affirmation of the rating is largely anticipated, Erste Group analysts have highlighted potential challenges that could 'endanger' the stable outlook. These include ongoing political tensions, rising external imbalances, and the looming possibility of U.S. sanctions against the Serbian oil company NIS due to its Russian ownership. Such factors could increase strain on public finances and contribute to a worsening risk profile for the country.

Conclusion

As S&P Global Ratings prepares for its latest assessment, the expectation that Serbia will retain its investment grade rating underscores the country's economic progress and stability over the past year. The outcome of this review will be closely watched by investors and policymakers, as it continues to shape Serbia's standing in the global financial landscape and its ability to attract crucial foreign capital.