Southeastern Europe & Mediterranean Emerging Market Economies: Bi-Weekly Report 19 August - 1 September 2025

CYPRUS
Albeit cooling down, the real estate market continues to overperform 
Modest -- yet solid -- real estate price growth is expected in the medium-term, on the back of moderating demand (mostly by incoming foreigners) and increased supply 
Cyprus’ tourism sector is set for a new record, outperforming key competitors

ROMANIA
Romania rolls out massive fiscal consolidation package to contain the largest budget deficit in the EU 
Prospective multi-year fiscal consolidation should weigh on economic outlook 
State revenue-enhancing measures should have an inflationary impact in the short-term, deterring NBR from easing further its stance, and thus entailing an even more contractionary stance

SERBIA
Prolonged political uncertainty erodes economic sentiment, despite healthy fundamentals 
GDP growth was broadly flat at a relatively weak 2.1% y-o-y for a 2nd consecutive quarter in Q2:25, mainly supported by (weakening) private consumption and inventory buildup
GDP growth is projected to land at 2.0% in FY:25 before accelerating to 3.8%. in FY:26, thanks, inter alia, to favourable base effects
Upside risks to inflation prompt a more cautious approach to monetary easing by the NBS

APPENDIX:
DETAILED MACROECONOMIC DATA
REGIONAL SNAPSHOT:  
        MACROECONOMIC INDICATORS
         FINANCIAL MARKETS