Serbia’s manufacturing sector is increasingly carrying industrial growth as weak electricity production continues to weigh on the wider industrial economy, highlighting an uncomfortable divide between expanding factories and the energy system on which they depend.
Industrial production in June was about 0.8% higher than a year earlier, based on the NBS series derived from official statistical data.
Manufacturing performed considerably better. Output was roughly 2.8% above June 2025, while mining was about 1% lower. Electricity, gas and steam production was more than 10% below its level a year earlier.
The contrast is economically significant.
Manufacturing is one of Serbia’s central transmission channels from foreign investment into exports, employment and productivity. Continued production growth therefore provides support for GDP and external trade.
But electricity supply remains a recurring weakness.
Energy-sector underperformance can affect industrial competitiveness even when it does not immediately constrain physical supply. Lower domestic electricity output can increase dependence on imports, expose companies to regional wholesale prices and reduce the ability of Serbia’s energy system to absorb new industrial loads cheaply.
That problem is becoming more important as Serbia seeks to attract capital-intensive industries while simultaneously electrifying transport, heating and industrial processes.
It also arrives as electricity markets across south-eastern Europe become more volatile because of increasing renewable penetration, transmission constraints and weather-dependent hydro production.
Mining provides a third, more subdued element to the industrial story. Output in June remained slightly below the corresponding level of 2025, despite Serbia’s significant copper, gold and other mineral operations.
For policy makers, the June numbers present a mixed picture.
Serbia’s factories are expanding quickly enough to contribute positively to economic growth, but the domestic energy system is not providing an equivalent growth impulse.
That divergence can be tolerated temporarily. It becomes more problematic if manufacturing investment continues to expand faster than power generation, networks and flexibility assets.
The country’s industrial policy and energy policy are therefore becoming harder to separate.
A manufacturing sector growing faster than the electricity system may still lift GDP in the short term. Over a longer horizon, however, power availability, cost and carbon intensity increasingly determine whether that manufacturing growth remains competitive in the European market.
