Serbia’s economy gathered pace during the second quarter of 2026, offering an early sign that stronger household consumption, investment and export capacity are beginning to lift growth above last year’s subdued level. The Statistical Office’s preliminary estimate places real year-on-year growth at 3.6 per cent, up from 3.2 per cent in the first quarter. The full sectoral and expenditure breakdown will be published on 31 August, so the precise balance between consumption, investment, government spending and net exports remains unclear.
The acceleration is significant because it follows a difficult 2025, when Serbia’s economy expanded by only 2 per cent, compared with 3.9 per cent in 2024. External trade weakness, geopolitical disruption and domestic political uncertainty weighed on corporate investment and industrial output last year. The latest figure suggests that the economy is returning towards its medium-term growth rate, although it does not yet amount to the investment-led expansion that Serbia is seeking ahead of EXPO 2027.
The surrounding monthly indicators point to an economy in which domestic demand is performing much better than industrial production. Retail turnover increased by 7 per cent in real terms during the first half of 2026, while average net earnings rose by 8.2 per cent in real terms between January and May. The average net salary reached RSD 118,398 in May, although the median was considerably lower at RSD 93,277, showing that the purchasing-power recovery is distributed unevenly across the workforce.
That combination of real wage growth and moderating inflation has given households more room to spend after several years in which food, energy and housing costs absorbed a growing share of income. Annual inflation eased to 2.7 per cent in June, while retail sales volumes remained 4.3 per cent higher than a year earlier. Consumption therefore appears to have provided a stable floor beneath the second-quarter GDP figure, even as the exceptionally strong retail growth recorded earlier in the year began to moderate.
The production side of the economy is considerably less convincing. Industrial output increased by only 0.8 per cent year on year in June and by 0.7 per cent across the first half. Manufacturing grew by 2.8 per cent in June, but mining contracted by 1 per cent and electricity, gas and steam production fell by 10.4 per cent. Seasonally adjusted data were weaker still, showing a monthly decline of 0.4 per cent in total industry and 1.3 per cent in manufacturing.
Employment figures reinforce the impression of uneven growth. Serbia had 2.356 million registered employees in the second quarter, 14,163 fewer than a year earlier. Manufacturing alone lost 17,422 jobs, while employment in wholesale and retail trade fell by 4,276. Output and spending can continue to grow while employment declines when companies automate, improve productivity or rely more heavily on existing capacity, but a prolonged divergence would raise questions about the inclusiveness and durability of the recovery.
External trade provides a more encouraging counterweight. Merchandise exports increased by 8.3 per cent to €17.97 billion in the first half, while imports rose by a more moderate 3.7 per cent to €21.68 billion. The trade deficit consequently fell to approximately €3.71 billion, from €4.32 billion a year earlier. Growth in capital-goods and intermediate-goods exports suggests that at least part of the recovery is connected to new industrial capacity rather than consumption alone.
Yet June also produced a warning against reading too much into the six-month trade improvement. Monthly imports increased by 17.3 per cent, substantially faster than the 9 per cent rise in exports, widening the monthly deficit to €777.5 million. Import growth may reflect machinery and equipment purchases associated with new factories and infrastructure, which would support future capacity. It may equally indicate that rising consumption and investment are beginning to pull more foreign goods into the economy. The detailed GDP release will be important in separating productive investment from an import-intensive expansion.
The 3.6 per cent quarterly reading is higher than the principal full-year forecasts, but it does not automatically imply that Serbia will maintain that rate across 2026. The National Bank of Serbia lowered its annual growth forecast to 3 per centin May, while the International Monetary Fund projected 2.75 per cent, reflecting uncertainty surrounding energy prices, regional trade and the Middle East conflict. Both institutions expect consumption and investment to support activity, with the state’s infrastructure and EXPO-related programme remaining an important component of fixed-capital formation.
Serbia is therefore moving into the second half of the year with stronger momentum but a familiar imbalance. Consumers are spending, real wages are rising and exports are expanding, while industrial production and employment remain hesitant. The August GDP breakdown will show whether the second-quarter acceleration came from sectors capable of raising productivity and export earnings or from a temporary combination of public expenditure, household consumption and favourable base effects.
