Serbian President Aleksandar Vučić is facing unprecedented pressure, grappling with an economic slowdown, U.S. sanctions, tensions with Russia and the European Union, declining foreign investment, and widespread protests, according to Germany’s Frankfurter Allgemeine Zeitung (FAZ).
Economic growth in Serbia has reportedly halved in 2025, with foreign investment falling and domestic consumption weakening, the newspaper said. Vučić is also confronting student protests at home, adding to the political strain.
FAZ highlighted the challenges in Serbia’s foreign policy, describing the country’s EU-aspirant “pendulum diplomacy” — balancing relations with Moscow, Beijing, Washington, and Brussels — as increasingly fragile, with serious repercussions for the domestic economy.
U.S. Sanctions and Energy Sector Strain
American sanctions have targeted Serbia’s majority Russian-owned oil industry, Naftna Industrija Srbije (NIS), complicating Vučić’s efforts to maintain economic stability. The U.S. aims to limit Russian energy exports to weaken Moscow’s military economy, but Russian authorities have resisted sales, leaving Vučić in a difficult position.
Vučić sought to ease tensions through close ties with U.S. President Donald Trump. Plans granting Trump’s son-in-law Jared Kushner rights to build on the General Staff grounds in Belgrade were scrapped amid public protests and legal challenges against Culture Minister Nikola Selaković. Shortly afterward, the U.S. imposed import restrictions on tires from China-owned Linglong factory in Zrenjanin, while Serbian exports to the U.S. remain burdened by a high 35% tariff, FAZ reported.
Moscow Pushback
Serbia welcomed the temporary U.S. approval allowing NIS to operate without sanctions until Jan. 23, reopening the Pančevo refinery. Speculation has linked the decision to Hungarian Prime Minister Viktor Orbán, with discussions that MOL of Hungary or ADNOC of Abu Dhabi might acquire Gazprom’s NIS shares.
Russia reacted negatively to earlier signals that Serbia could nationalize NIS, with President Vladimir Putin reminding Belgrade of contractual obligations. Moscow’s decision to extend gas delivery agreements to Serbia only until March 2026 has been interpreted as a warning, FAZ said. Relations have also been strained over Serbia’s sale of ammunition to Ukraine, which Vučić suspended in the summer amid Western praise for the transactions.
Domestic and International Challenges
Serbia’s relationship with the EU, its largest trading partner and investor, has also deteriorated. No new negotiation chapters have opened, and Vučić skipped the EU-Western Balkans Summit late last year. Meanwhile, China has not announced new economic initiatives in Serbia.
FAZ concluded that internal protests, external economic pressure, and a climate of uncertainty are all weighing on the economy of Serbia, a nation of 6.5 million. Forecasts are bleak, with halved foreign investment, a declining construction sector, weak domestic demand, and projected growth of just 2% in 2025. Optimistic projections for 2026 place growth below 3%, although the National Bank of Serbia predicts 3.5%.