Southeastern Europe & Mediterranean Emerging Market Economies: Bi-Weekly Report 29 April - 12 May 2025

ROMANIA
Ruling pro-EU coalition collapses following far-right vote win in the 1st round of Presidential election, throwing Romania into a fresh political crisis 
Worryingly, political instability comes at a time when the economy is struggling with twin deficits
Markets slump on political turmoil

SERBIA
A new SNS Government, headed by the newcomer in politics D. Macut, was approved by Parliament in mid-April, failing, however, to ease political noise 
FY:25 GDP growth revised down to 2.9% on political instability
Fiscal support is critical for sustaining GDP growth this year
Broad-based uncertainty and upside risks to inflation warrant a cautious approach to monetary easing

CYPRUS
A record-high primary surplus (5.6% of GDP) in FY:24 -- the largest in the EU, by far overperforming fiscal targets -- thanks, inter alia, to a structural improvement in tax revenue, along with strong nominal GDP growth, drove a (further) sharp decline in public debt
Continued -- yet decreasing -- fiscal surpluses, along with a still favourable -- but diminishing -- snowball effect, should bring the public-debt-to-GDP ratio below the EU threshold of 60% by end-2026, for the first time since 2010


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