Serbia’s merchandise exports grew twice as fast as imports in the first seven months of 2026, cutting the country’s trade deficit by 12.6% and providing a stronger external backdrop as economic growth accelerates.
Exports reached €21.09 billion between January and July, up 8.8% from a year earlier, while imports increased 4.4% to €25.50 billion, data from the Statistical Office showed on Monday.
Total merchandise trade rose 6.3% to €46.60 billion.
The trade deficit narrowed to €4.41 billion, while export coverage of imports improved to 82.7% from 79.4% in the same period of 2025.
The improvement is significant because Serbia is simultaneously experiencing stronger domestic demand.
Second-quarter GDP grew 3.8% year on year, with household consumption up 4% and fixed investment rising 3.3%.
A strengthening economy would normally be expected to pull in imports more rapidly.
Instead, nominal merchandise exports have substantially outpaced import growth.
That raises the prospect that Serbia’s manufacturing and regional export base is becoming a stronger contributor to growth, although the quality of the improvement will depend on how broadly exports are distributed across companies and sectors.
EU remains dominant market
European Union countries accounted for 58.6% of Serbia’s total merchandise trade, underlining how closely the economy remains tied to European industrial demand.
That dependence is both a strength and a vulnerability.
Serbia benefits from its geographic proximity to the bloc, trade arrangements and deep integration into German, Italian and Central European supply chains.
But weakness in European manufacturing can quickly affect Serbian factories.
This is particularly relevant in the automotive sector, where European carmakers and suppliers are facing pressure from weak demand, high costs and Chinese competition.
Serbia employs roughly 100,000 people in automotive-component manufacturing and has committed around €652 million in state incentives to the sector since 2016.
The country therefore needs export growth to broaden beyond a relatively small group of large foreign-owned manufacturers if the external improvement is to become more durable.
CEFTA generates large surplus
Serbia continues to perform particularly strongly in regional trade.
Its surplus with CEFTA economies reached about €1.91 billion in the first seven months.
Exports to neighbouring markets include cereals, beverages, vehicles, pharmaceuticals and electrical equipment.
That regional surplus is strategically important because Serbia’s trade with the EU remains structurally more import intensive.
CEFTA provides a market where Serbian companies, including locally owned firms, often hold stronger competitive positions.
The western Balkans therefore remain an important counterweight to Serbia’s deficit with larger industrial economies.
Regional trade also typically involves shorter supply chains and a higher probability of locally generated value added.
For Serbian policymakers, preserving access to those markets while integrating more deeply with the EU remains an important part of the country’s export strategy.
Faster exports help the external balance
The narrowing deficit reduces one of the traditional vulnerabilities associated with Serbia’s growth model.
Rapid domestic expansion often produces rising imports of machinery, energy, consumer products and intermediate goods.
That can widen the current-account deficit and increase dependence on foreign capital inflows.
Serbia has historically financed those imbalances partly through strong foreign direct investment.
A smaller merchandise deficit reduces the financing requirement.
It also gives the National Bank of Serbia more room to maintain currency stability without relying as heavily on capital inflows.
The improvement is particularly useful at a time when Serbia is undertaking an exceptionally large investment programme.
Infrastructure construction, industrial projects, renewable energy and EXPO-related development all generate demand for imported machinery and materials.
Export growth needs to keep pace if those investments are not to create a substantially larger external deficit.
The composition of exports matters
The headline figures do not show whether the improvement is broad based.
That will be the key analytical issue.
Serbia’s export economy is highly concentrated in several sectors.
Electrical equipment.
Automotive components.
Metals.
Mining.
Machinery.
Agricultural products.
Rubber and tyres.
A relatively small number of large foreign-owned companies account for a significant share of total exports.
That model has delivered strong gross trade volumes but can limit the amount of value retained domestically when factories import a large share of their inputs.
A €100 million increase in exports has a very different economic impact depending on whether the product contains mostly Serbian labour, engineering and materials or primarily imported components assembled locally.
The next phase of export policy therefore needs to focus more heavily on domestic value added.
Chinese investment could change the export structure
Serbia’s industrial investment pipeline is changing rapidly.
Chinese companies are becoming more prominent in automotive components, batteries, robotics, mining and advanced manufacturing.
Reliance Batteries is preparing a €100.5 million plant in Inđija.
Minth has opened a humanoid-robot production operation in Šabac and plans a larger robotics platform.
Chinese automotive suppliers are receiving a growing share of new state investment incentives.
If these projects reach scale, they could materially alter Serbia’s export structure.
The opportunity is to add higher-value products such as batteries, electronics and robotic systems.
The risk is that Serbia becomes primarily an assembly base for Chinese components destined for European markets.
The difference will depend on localisation.
Mining remains an important export driver
Copper and gold production around Bor has also become increasingly significant to Serbia’s export base following large investment by China’s Zijin.
Mining exports provide substantial foreign-currency earnings and have helped diversify the economy away from conventional manufacturing.
But commodity exports carry different risks.
Prices are volatile.
Mining is capital intensive and generates fewer jobs per euro of output than manufacturing.
Environmental constraints can also affect project execution, as recent regulatory issues surrounding Zijin’s Malka Golaja exploration activities have shown.
Serbia therefore benefits most if mining supports downstream processing and engineering rather than remaining primarily a raw-material export industry.
Stronger dinar has not prevented export growth
Serbia has maintained a highly stable dinar against the euro for years.
That stability helps businesses plan and limits foreign-currency risk.
But it also means exporters cannot rely on currency depreciation to restore competitiveness when labour costs rise.
The 8.8% export increase is therefore notable against a backdrop of strong wage growth.
Serbian producers are having to absorb higher labour costs through productivity improvements, margins or higher prices.
This reinforces the need for automation and capital investment.
Companies that remain competitive despite rising wages are more likely to support a sustainable convergence with EU income levels.
Those relying primarily on cheap labour will face increasing pressure.
Import growth remains necessary
Slower import growth is positive for the trade deficit but should not automatically be interpreted as desirable in every category.
Serbia needs imports of machinery and technology if it is to modernise its economy.
Factories importing production equipment today may generate higher exports later.
Energy infrastructure also requires imported turbines, electrical equipment and specialist technology.
The strongest trade improvement would therefore come from slower growth in consumer and energy imports combined with continued strong imports of productive capital goods.
That composition will determine whether the narrowing deficit reflects stronger competitiveness or merely weaker demand for certain imported products.
Energy remains a structural risk
Serbia’s external accounts remain exposed to energy imports.
The country depends on imported crude oil and gas and periodically becomes a significant electricity importer when hydropower output falls or coal generation is constrained.
Low Danube water levels during the summer of 2026 have complicated petroleum-product imports, while uncertainty surrounding NIS has highlighted the strategic vulnerability associated with Serbia’s only refinery.
Energy prices can therefore alter the trade balance rapidly.
A sustained increase in oil or gas prices would push the import bill higher even if physical volumes did not change.
Renewable-energy investment and stronger domestic electricity production could reduce part of that exposure over time.
Export coverage approaches a stronger level
The increase in export coverage to 82.7% is therefore an important indicator.
Serbia still runs a meaningful goods deficit.
But the direction is improving.
Every percentage-point increase in export coverage reduces the gap that needs to be financed through services exports, remittances, FDI or other capital flows.
Serbia has a strong services position, particularly in IT and professional services, meaning the merchandise deficit alone does not determine the overall external balance.
Still, narrowing the goods gap makes the economy more resilient.
GDP and trade data now point in the same direction
The Aug. 31 releases provide a relatively favourable combination.
Second-quarter GDP growth was revised up to 3.8%.
Construction rebounded.
Household consumption strengthened.
Investment increased.
At the same time, the seven-month merchandise deficit narrowed 12.6%.
That suggests Serbia is avoiding, at least for now, one of the classic problems of rapid catch-up economies: accelerating domestic growth accompanied by a sharply widening trade deficit.
Whether that continues will become increasingly important as fiscal policy turns more expansionary.
