Serbia’s external accounts in 2025 showed a pattern that has become increasingly familiar in the country’s macroeconomic structure: solid export growth, continued inflows from services and remittances, but still not enough to offset the wider structural gap between what the economy earns from abroad and what it spends. In the first eleven months of 2025, the current account deficit reached €3.480 billion, which was 13.1% higher than in the same period of the previous year.
That number is important because it captures several underlying tensions at once. Serbia remains a highly open economy with expanding exports and strong manufacturing integration into European supply chains, but it also remains dependent on imported goods, imported inputs, and external financing. The current account balance therefore continues to reflect both progress and vulnerability. The economy is productive enough to export at scale, but not yet balanced enough to finance its external needs fully through trade and domestic value capture alone.
The composition of the current account deficit explains why the gap widened. The largest single driver remained the merchandise trade balance. In the first eleven months of 2025, the goods deficit amounted to €5.706 billion. This was actually 2.6% lower than in the same period of the previous year, which means the goods balance by itself was not the main reason the overall current account deteriorated. Exports of goods grew by 8.4%, while imports of goods rose by 6.5%, showing that the trade side of the economy was still improving in relative terms.
The real deterioration came elsewhere, especially in services and income flows. Serbia continued to run a surplus in international trade in services, but that surplus fell materially. In the first eleven months of 2025, the services surplus stood at €1.923 billion, down by €511.5 million, or 21.0%, compared with the same period a year earlier.
That decline matters because services have increasingly acted as a stabilizer in Serbia’s external accounts, especially through ICT exports and business services. When the services surplus narrows, the current account comes under pressure even if goods exports are still growing.
The second major factor was the primary income balance, which remained deeply negative. The deficit on primary income reached €4.432 billion in the first eleven months of 2025. This part of the balance of payments reflects profit repatriation, reinvested earnings, interest payments, and other investment-related flows. The most important component inside it was the net outflow associated with direct investment income, which reached €3.767 billion. Within that figure, €1.879 billion came from dividends, €1.565 billion from reinvested earnings, and €323.4 million from interest.
This is one of the most revealing structural features of Serbia’s external model. Foreign direct investment has helped build the country’s export manufacturing base, but over time it also generates rising income outflows. As foreign-owned firms mature and become more profitable, the outward flow of dividends and reinvested profits increases. That is normal for an FDI-led development model, but it also means export expansion alone does not automatically translate into external balance improvement. Part of the value created inside Serbia is continuously transferred abroad through income flows.
This dynamic creates a form of structural external dependence. Serbia benefits from foreign-owned manufacturing, external capital, and export integration, but the price of that model is a persistent drain on the current account through profit repatriation and investment income outflows. In years when exports are growing strongly, that pressure can be manageable. In years when services weaken or FDI inflows slow, the same structure becomes more fragile.
There was, however, an important offsetting force: secondary income. Serbia continued to record a strong surplus on this account, which reached €4.735 billion in the first eleven months of 2025. The most important contributor was worker remittances, where the net inflow reached €3.317 billion. Additional support came from other personal transfers and current transfers linked to private and cross-border economic activity.
These inflows remain one of the strongest external stabilizers in the Serbian economy. Remittances act as a buffer against trade deficits and income outflows, helping sustain consumption, support foreign-exchange inflows, and reduce the size of the external financing need. Without this transfer base, Serbia’s current account position would be materially weaker.
Yet reliance on remittances also reveals a deeper issue. A country whose current account is stabilized by large private transfers from abroad is benefiting from a real flow of support, but that support does not replace the need for a stronger domestic export and value-added structure. Remittances can soften the external gap, but they do not fundamentally resolve the dependence on imported goods, foreign capital, and externally owned production.
The monthly picture at the end of the year reinforced the sense of growing external pressure. In November 2025, the current account deficit reached €555.6 million, compared with €213.2 million in the same month of the previous year. This sharp increase was driven by a wider goods deficit, a larger net outflow of dividends, and a smaller services surplus.
That monthly deterioration matters because it suggests the pressure on the current account was not evenly distributed across the year. It intensified late in the period, at the same time as Serbia was also dealing with industrial weakness in refining, uneven manufacturing momentum, and softer investment inflows.
This is why the current account deficit should not be read only as a macroeconomic bookkeeping outcome. It is the external mirror of Serbia’s broader growth structure. The country exports heavily, especially in manufacturing, but it also imports heavily. It attracts foreign capital, but that capital later generates income outflows. It earns service revenues, but those can weaken. It receives remittances, but those are compensatory rather than transformational.
The financing side of the balance of payments shows how Serbia has been managing this gap. In the first eleven months of 2025, net inflows on the financial account amounted to €3.684 billion, up sharply from the previous year. These inflows came mainly from foreign direct investment, net corporate and banking borrowing, and a reduction in foreign-exchange reserves.
That financing was sufficient to cover the external gap, but the quality of financing changed during the year. Net foreign direct investment inflows fell to €1.944 billion, a decline of 52.5% from the same period of the previous year. Gross FDI inflows fell to €2.981 billion, down 35.5%.
This matters because Serbia has historically relied on FDI as the preferred way to finance its external imbalance. When the current account deficit is covered by strong FDI inflows, the external structure looks more sustainable than when it is financed through debt, reserve drawdown, or more volatile portfolio movements. In 2025, that relationship weakened. The current account deficit rose while FDI inflows fell, making the financing mix less comfortable.
The broader macroeconomic implication is clear. Serbia’s external gap remains manageable, but the structure supporting it became less favorable in 2025. Goods exports were improving, yet the services surplus narrowed. Remittances remained strong, yet profit outflows stayed large. FDI continued to come in, yet much less than a year earlier. The result was not an external crisis, but it was a reminder that Serbia’s balance-of-payments position still depends on several offsetting flows moving in the right direction at the same time.
That dependence becomes more important when seen against the trade structure. Total exports reached €33.068 billion in 2025, with manufacturing accounting for 87.6% of that total. This means Serbia has built a serious export base, but the current account data show that export scale alone is not enough. The external gap persists because a large share of the industrial system still depends on imported inputs, while part of the value created domestically is transferred abroad through income flows.
This is why the current account deficit should be understood as a measure of industrial depth as much as a financial balance. Economies with stronger domestic supply chains, more locally retained profits, and higher technological capture tend to translate export growth into stronger external balances. Economies with externally controlled supply chains and high import intensity can export a lot and still run sizable current account deficits. Serbia in 2025 remained closer to the second model.
The policy challenge is therefore not simply to reduce the current account deficit numerically. It is to change the structure that produces it. That means deeper local supplier networks in manufacturing, more domestic value added in export sectors, stronger service exports, and a financing model that leans less heavily on fresh external inflows to offset persistent structural gaps.
The €3.480 billion current account deficit in the first eleven months of 2025 was not catastrophic. It was financeable, and it existed alongside continued export expansion and macroeconomic stability. But it was also a signal that Serbia’s external model remains dependent on imported production, foreign-owned profitability, and transfer-based cushioning. The country has built an export machine. The next step is to make that machine retain more value at home.
