Serbia’s economy entered 2026 with stronger momentum than in the second half of last year, as rising household spending, expanding services activity and improving export performance helped offset continued weakness in construction and industrial production.
According to preliminary estimates from the Statistical Office of the Republic of Serbia, real gross domestic product (GDP) grew by 3.2% in the first quarter of 2026 compared with the same period last year. On a seasonally adjusted basis, the economy expanded by 0.2% compared with the fourth quarter of 2025, indicating that growth continued despite a challenging regional economic environment.
The result marks a notable acceleration from the 2.2% annual growth recorded in the final quarter of 2025 and suggests that domestic demand remains resilient despite ongoing uncertainty across European markets.
At current prices, Serbia generated approximately RSD 2.56 trillion in GDP during the first quarter, equivalent to roughly €21.9 billion at average exchange rates during the period. Gross value added reached RSD 2.19 trillion, while net taxes contributed an additional RSD 374 billion.
A closer examination of the data reveals an economy increasingly driven by consumption and services rather than traditional industrial activity.
The strongest contribution came from the combined sectors of wholesale and retail trade, transportation, storage, accommodation and food services, where gross value added increased by 4.9% year-on-year. The performance reflects continued growth in consumer spending, tourism activity, logistics demand and broader service-sector expansion.
Financial services were among the fastest-growing sectors of the economy, recording real growth of 6.9%. Banking, insurance and financial intermediation activities continue to benefit from rising incomes, expanding lending activity and growing demand for financial services across households and businesses.
Professional, scientific, technical and administrative services expanded by 6.1%, highlighting the growing importance of knowledge-based industries within Serbia’s economic structure. Information and communications technology also remained a major contributor, delivering growth of 3.5% and maintaining its position as one of the country’s most internationally competitive sectors.
Public administration, education and healthcare activities increased by 4.3%, while arts, entertainment and other service activities recorded growth of 6.4%, further reinforcing the broad-based expansion of the service economy.
Agriculture produced one of the most notable surprises of the quarter. Following several periods of modest performance, agricultural gross value added increased by 7.1%, providing an important contribution to overall growth and partially offsetting weakness elsewhere in the economy.
The largest concern remains construction.
The sector contracted by 5.1% year-on-year, extending a period of volatility that has affected one of Serbia’s historically important growth engines. Rising construction costs, project delays, financing conditions and a slowdown in some segments of residential development appear to be weighing on activity despite continued public infrastructure investment.
Industry also remained under pressure. The combined sector covering mining, manufacturing, electricity, gas, water supply and waste management recorded a 0.7% decline in gross value added compared with the first quarter of last year.
The industrial figures are particularly significant because they highlight one of the central challenges facing the Serbian economy in 2026. While domestic demand remains relatively strong, external industrial demand across Europe continues to be constrained by slower manufacturing activity, especially in Germany and other key export markets.
From the expenditure perspective, growth was remarkably broad-based.
Household final consumption increased by 4.8%, confirming that private consumption remains the primary driver of economic expansion. Wage growth, employment gains and stable labor market conditions continue to support consumer spending despite inflationary pressures experienced during previous years.
Government consumption expanded by 5.1%, while spending by non-profit institutions serving households increased by 5.6%.
Investment activity remained positive but comparatively modest. Gross fixed capital formation rose by 1.4%, indicating continued investment growth but at a slower pace than many policymakers would prefer. Given Serbia’s ambitious infrastructure, energy and industrial development plans, stronger investment growth will likely be required to sustain higher long-term economic expansion.
Foreign trade also contributed positively.
Exports of goods and services increased by 4.6%, outpacing import growth of 3.6%. The figures suggest that external demand remains supportive despite slower economic activity across much of Europe. Export performance is particularly important given Serbia’s deep integration into European manufacturing supply chains and growing services exports.
The composition of growth provides important signals for investors.
The strongest-performing sectors are increasingly concentrated in services, technology, finance and consumption-driven activities. By contrast, construction and industry are facing greater challenges from both domestic and international conditions.
For the energy sector, the industrial slowdown deserves particular attention. Lower industrial activity can influence electricity demand patterns, natural gas consumption and broader infrastructure utilization rates. However, the continued expansion of trade, logistics, tourism and information technology services is helping maintain overall economic momentum.
Looking ahead, Serbia’s economic trajectory will depend heavily on developments within the broader European economy. Stronger industrial demand from the European Union would provide support for manufacturing and exports, while continued growth in domestic consumption could help sustain service-sector expansion.
The first-quarter figures suggest that Serbia is entering the remainder of 2026 from a position of relative stability. Growth is increasingly diversified across services, finance, technology and consumption, reducing dependence on any single sector. The challenge now lies in restoring stronger momentum in industry and construction while maintaining the robust domestic demand that has become the principal engine of economic expansion.
