Southeastern Europe & Mediterranean Emerging Market Economies: Bi-Weekly Report 19 May - 1 June 2026

CYPRUS
Significant gains by the far-right and the entry of new parties into Parliament after the May 24 legislative elections make post-election political alignments more challenging
Broader political continuity is expected, although policy execution risks have increased


NORTH MACEDONIA
Headline inflation rebounds amid higher energy prices
Sustainable disinflation towards the comfort-zone of c. 2.0% is challenged by strong wage dynamics, prompting the NBRNM to shift towards a tightening bias


SERBIA
Favourable base effects drive GDP growth in Q1:26, despite weak sequential dynamics
GDP growth is projected to reach 2.6% in FY:26 before accelerating to 3.9% in FY:27, supported by public investment linked to EXPO 2027 preparations, with associated gains in tourism inflows and service exports
Downside risks dominate the outlook, mainly stemming from potential spillovers from the conflict in the Middle East
Policies are unlikely to provide much support to GDP growth, amid heightened uncertainty


APPENDIX:
DETAILED MACROECONOMIC DATA
REGIONAL SNAPSHOT:  
        MACROECONOMIC INDICATORS