Serbia entered 2026 with a stronger-than-expected economic performance, as household consumption, retail activity and service-sector expansion offset weakness in construction and parts of industry. The latest first-quarter data from the Statistical Office suggest that domestic demand remains the principal engine of growth, reinforcing the country’s resilience despite a more uncertain European economic environment.
Real GDP expanded by 3.2% year-on-year in the first quarter of 2026, accelerating from the 2.2% growth recorded in the final quarter of 2025. On a seasonally adjusted basis, economic activity increased by 0.2% compared with the previous quarter, indicating that growth momentum remained positive despite slower activity in several investment-related sectors.
Behind the headline figure lies a clear shift in the composition of growth. Serbia’s economy is increasingly being supported by consumers, services and trade rather than by construction activity or heavy industry. The strongest contribution came from the combined segment covering wholesale trade, retail trade, transport, storage, accommodation and food services, where gross value added increased by 4.9% year-on-year. This category has become one of the largest contributors to economic expansion, reflecting continued consumer spending, tourism flows and logistics activity.
The strength of domestic consumption is evident across expenditure data. Household final consumption expenditure grew by 4.8%, while government consumption increased by 5.1% and spending by non-profit institutions serving households expanded by 5.6%. These figures demonstrate that internal demand remains robust despite higher financing costs and slowing economic growth across much of the European Union.
The retail sector appears to be benefiting from stable labour market conditions and continued wage growth. Earlier monthly data already pointed to strong consumer activity, with retail turnover showing double-digit nominal growth during the quarter. The latest GDP release confirms that these trends translated into a significant contribution from trade and consumer-oriented services.
A particularly notable feature of the first-quarter data is the contrast between services and investment-linked sectors. While trade and services expanded strongly, construction remained one of the weakest areas of the economy. Gross value added in construction declined by 5.1% year-on-year, following a volatile 2025 marked by fluctuating infrastructure activity and changing project execution schedules.
The construction slowdown is significant because the sector has traditionally been one of Serbia’s major growth drivers through large-scale infrastructure projects, residential development and foreign direct investment. The weakness suggests that some public and private investments have either been delayed or are progressing more slowly than anticipated during the opening months of the year.
Industry also produced mixed signals. The broad industrial category, which includes manufacturing, mining, energy supply and utilities, recorded a modest contraction of 0.7%. While not dramatic, the decline highlights ongoing challenges facing industrial exporters, particularly in a European market characterized by subdued manufacturing demand and continuing competitiveness pressures.
At the same time, several higher-value service sectors continued to outperform. Information and communication activities expanded by 3.5%, financial and insurance activities increased by 6.9%, while professional, scientific and technical services recorded growth of 6.1%. These sectors increasingly represent a larger share of Serbia’s economic structure and demonstrate the gradual diversification of growth beyond traditional manufacturing industries.
Agriculture provided one of the strongest positive surprises of the quarter. After several periods of volatility linked to weather conditions, agricultural gross value added increased by 7.1% year-on-year. The recovery offers an important contribution to regional economic activity and export potential, although agricultural performance remains highly dependent on climatic conditions throughout the remainder of the year.
External trade also continued to support growth. Exports of goods and services increased by 4.6%, while imports rose by 3.6%. The fact that exports expanded faster than imports suggests that foreign demand remains an important secondary pillar of economic activity despite weaker industrial production figures.
The export performance aligns with broader trade statistics showing improving external balances during the opening months of 2026. Serbia’s merchandise trade data indicated stronger export growth than import growth and a significantly narrower trade deficit compared with the same period of the previous year.
In nominal terms, Serbia generated RSD 2.56 trillion of GDP during the first quarter. Gross value added reached approximately RSD 2.19 trillion, while taxes less subsidies on products contributed an additional RSD 373.7 billion. Among sectors, manufacturing and related industrial activities remained the largest component of economic output, generating nearly RSD 473 billion, followed by public administration, education and healthcare activities with approximately RSD 340 billion, and the broad trade and tourism segment with nearly RSD 379 billion.
The emerging economic picture is one of an economy transitioning toward consumption and services as its principal growth engines. While investment and construction remain important, the first-quarter results demonstrate that Serbian growth is increasingly linked to household spending, logistics, information technology, financial services and tourism-related activity.
For investors and corporate decision-makers, the most important signal is that domestic demand remains remarkably resilient. Consumer spending growth approaching 5%, together with expanding trade activity and positive service-sector momentum, provides support for retailers, logistics operators, banks, telecommunications providers and commercial real estate developers.
The key challenge for the remainder of 2026 will be whether construction and industrial activity can regain momentum. A broader recovery in those sectors would create a more balanced growth profile and strengthen the sustainability of expansion. Without a revival in investment-intensive industries, Serbia risks becoming increasingly dependent on consumption-led growth at a time when external economic conditions remain uncertain.
For now, however, the first quarter delivers a clear message: Serbia’s economy has entered 2026 on firmer footing than many expected, with consumers, trade and services carrying the growth story while investment sectors work through a more challenging phase. The result is a 3.2% expansion rate, positioning Serbia among the faster-growing economies in Europe during the opening months of the year and providing a stronger base for economic performance through the remainder of 2026.
