Serbia’s industrial production fell 2.3% year on year in July, as another sharp contraction in the energy sector and weaker manufacturing offset gains in mining and capital goods, highlighting an increasingly uneven industrial recovery despite faster overall economic growth.
Industrial output in the first seven months of 2026 remained 0.3% above the same period last year, the Statistical Office said, leaving industry broadly stagnant over the year to date.
On a seasonally adjusted basis, total industrial production increased 0.6% from June, but manufacturing fell 1.9% month on month, suggesting that the headline monthly improvement was concentrated outside the country’s main factory sector.
The July figures contrast with Serbia’s broader economic performance. Gross domestic product expanded 3.8% year on year in the second quarter, stronger than an earlier estimate of 3.6%, as construction, household consumption and services provided most of the momentum.
Industry, however, is showing a much more fragmented picture.
Manufacturing output fell 1.6% year on year in July, while electricity, gas, steam and air-conditioning supply contracted 8.8%. Mining increased 3.0%.
The weakness was widespread. Production declined in 18 industrial divisions representing around 60% of total industrial output, while 11 divisions accounting for the remaining 40% recorded increases.
That distribution suggests the contraction was not caused by a single large industry, even though particularly weak energy output had a significant effect on the headline index.
The energy sector has become one of the main constraints on Serbia’s industrial performance this year. Electricity, gas, steam and air-conditioning supply was 4.8% lower in January-July than a year earlier, after dropping sharply in several recent months.
Output classified for energy use fell 7.5% year on year in July and was 4.2% lower over the first seven months.
The weakness is particularly significant because Serbia’s electricity system remains heavily dependent on lignite-fired generation and hydropower, making industrial energy output sensitive to coal availability, maintenance schedules, hydrological conditions and electricity imports.
Manufacturing produced a more mixed picture.
Although total factory output fell 1.6% in July, manufacturing remained 1.3% higher in January-July than during the same period last year.
The strongest contribution continued to come from industries producing investment goods.
Capital-goods production increased 8.8% year on year in July and 10.9% in the first seven months, considerably outperforming the rest of industry.
Motor vehicle manufacturing was one of the strongest individual sectors, with production of vehicles, trailers and semi-trailers rising 29.6% from July 2025.
For January-July, motor vehicle production was 44.3% higher than a year earlier, making the sector one of the clearest growth engines in Serbian manufacturing.
The increase reflects the expanding importance of automotive production, including the ramp-up of new manufacturing capacity and Serbia’s growing integration into European electric-vehicle and automotive supply chains.
Electrical equipment production also performed strongly, increasing 10.7% year on year in July and 11.3% in January-July.
Machinery and equipment production rose 13.6% in July and was 9.9% higher over the seven-month period.
Those figures suggest investment-oriented manufacturing remains relatively resilient even as several traditional industrial sectors struggle.
Chemical production increased 5.3% year on year in July, while output of non-metallic mineral products, which includes materials closely linked to construction, rose 6.0%.
Wood-processing production increased 12.8%, while paper and paper products rose 2.1%.
Food manufacturing was broadly stable, gaining 0.7% year on year, though cumulative production during January-July was fractionally below last year’s level.
Several other industries recorded substantial contractions.
Basic metals production fell 16.6% year on year in July and was 12.5% lower in the first seven months, indicating continuing weakness in one of Serbia’s larger energy-intensive manufacturing segments.
Fabricated metal products fell 6.5% in July and 7.8% in January-July.
Production of computers, electronic and optical equipment declined 7.5% year on year, while pharmaceutical production dropped almost 20%.
Coke and refined petroleum products fell 13.0% in July and were 3.8% lower in January-July.
Other transport equipment recorded an even sharper fall, with July production down almost 59% from a year earlier.
Consumer-facing industries were also generally weaker.
Production of durable consumer goods fell 7.9% year on year in July and was 12.6% lower in January-July.
Non-durable consumer goods declined 5.1% in July and 1.7% over the seven-month period.
Textile production was down 12.2% year on year, clothing fell 12.9% and leather products declined 4.7%.
The weakness in these labour-intensive industries contrasts with the expansion in vehicles, electrical equipment and machinery, pointing to an ongoing shift in Serbia’s manufacturing structure towards more capital-intensive sectors.
Mining provided some support to the July figures.
Total mining output increased 3.0% year on year, driven partly by an 8.4% rise in coal extraction and a 1.1% increase in crude oil and natural gas production.
Metal ore mining slipped 0.9% in July, although output in the sector remained 2.3% higher during January-July.
The mining data are important because Serbia has experienced substantial investment in copper and gold production, particularly around Bor in eastern Serbia, making metal mining an increasingly important component of exports and industrial activity.
Despite the July decline, the composition of Serbian industry provides some positive signals.
Intermediate goods excluding energy increased 0.3% year on year in July and 2.0% in January-July, while capital goods continued to expand at double-digit cumulative rates.
That suggests parts of the industrial investment cycle remain strong even as energy, metals and consumer-oriented manufacturing weaken.
The difference between rapidly expanding motor vehicle and machinery production and declining traditional sectors is increasingly defining Serbia’s industrial performance.
It also helps explain why industrial output has remained almost flat despite significant new investment and stronger GDP growth.
Serbia is adding production capacity in automotive, electrical equipment and other export-oriented industries, but those gains are being partly offset by weaker electricity generation, metals, petroleum refining and traditional consumer manufacturing.
July’s seasonally adjusted figures reinforce that mixed picture.
Total industrial output rose 0.6% from June, but manufacturing declined 1.9%, indicating that the improvement in the headline number should not yet be interpreted as a broad factory-sector recovery.
The comparison with the broader economy is particularly striking.
While GDP grew 3.8% in the second quarter, industrial production increased only 0.3% during the first seven months of the year.
Construction, services and domestic consumption are therefore carrying a larger share of Serbia’s current economic expansion than industry.
The industrial data nevertheless contain an important structural shift beneath the weak headline figure. Motor vehicles were up 44.3%, electrical equipment 11.3% and machinery 9.9% in January-July, while capital-goods production overall rose 10.9%.
At the other end of the spectrum, energy output was down 4.2%, durable consumer goods 12.6% and basic metals 12.5%.
The remainder of 2026 will therefore depend less on whether Serbian industry grows as a single aggregate and more on whether expanding automotive and investment-goods production can become large enough to outweigh persistent weakness in energy and traditional manufacturing.
For now, July’s 2.3% annual contraction shows that Serbia’s industrial economy remains considerably weaker and more uneven than the country’s headline GDP growth would suggest.
