Serbia’s balance of payments for the first four months of 2026 tells a more reassuring story than the headline volatility of recent years would suggest. The country is not suddenly free of external pressure, nor has its import-led investment model disappeared. But the numbers point to a cleaner external position: a smaller goods deficit, a stronger services cushion, resilient remittance inflows and a current-account shortfall that has become much easier to finance.
The current-account deficit stood at EUR 404.9mn in January–April 2026, a decline of 69.8% compared with the same period of 2025. For a Serbian economy that has often lived with a structural trade gap financed by foreign direct investment, borrowing, remittances and services exports, this is not a marginal movement. It changes the near-term reading of external vulnerability. A deficit of this size, at this point in the year, is no longer the dominant macro risk. It is a manageable financing item, provided the underlying drivers are not temporary.
The improvement came first from goods trade. Serbia’s goods deficit narrowed by 26.7% year on year to EUR 1.8bn in the first four months of 2026. In April alone, the deficit was EUR 637.1mn, down 21.2% from a year earlier, with exports rising 7.8% and imports up only 1.2%. This is the most important signal in the data. Serbia’s external balance has improved not because domestic demand collapsed, but because export performance strengthened while import growth remained contained.
The industrial composition of that export growth matters. Manufacturing contributed 8.2 percentage points to export growth, while mining and quarrying added 2.1 percentage points. The strongest single contribution came from the manufacture of motor vehicles, trailers and semi-trailers, which added 6.1 percentage points, while mining of metal ores contributed 2.0 percentage points. This points to an external account increasingly tied to industrial production chains rather than only to traditional commodity flows or domestic consumption cycles.
The automotive signal is particularly important. Exports of motor vehicles, trailers and semi-trailers rose by 59.0% year on year in the first four months, contributing 6.2 percentage points to total goods export growth. That tells investors two things. First, Serbia’s export base is still highly sensitive to a relatively small number of large industrial platforms. Second, when those platforms are running, the balance-of-payments effect is immediate. The improvement in exports to Italy, linked to the automotive industry, reinforces Serbia’s position as a supplier economy tied to EU manufacturing demand rather than a purely regional Balkan market.
The same data also show the weaknesses. Electricity, gas, steam and air-conditioning supply made a negative contribution of 1.5 percentage points to export growth, with exports in that category down 48.4% year on year. Agriculture, forestry and fishing also subtracted from export growth, falling 20.0%. Serbia’s external position is therefore better, but not uniformly stronger. It is being carried by manufacturing and mining, while energy and agriculture are acting as drags. That distinction matters for any serious forecast of the current account over the rest of 2026.
On the import side, the picture is equally revealing. Total imports rose by only 1.8% in the first four months. Manufacturing imports increased 6.0%, with motor vehicles and trailers, refined petroleum products and basic metals providing positive contributions. But mining and quarrying imports fell sharply, down 35.9%, with crude petroleum and natural gas imports down 35.2%. Electricity, gas, steam and air-conditioning imports also declined 34.8%. This means part of the goods-deficit improvement reflects lower energy-related import pressure, not only stronger export competitiveness.
That point should not be understated. A smaller energy import bill can improve the external accounts quickly, but it may not represent a permanent structural shift unless domestic generation, storage, grid flexibility and regional trading capacity improve at the same time. Serbia’s external resilience will be stronger if lower energy imports are linked to better system performance and domestic supply, not simply to temporary price or volume effects.
The European Union remains the anchor of Serbia’s goods trade. EU countries accounted for 63.1% of Serbia’s goods exports in the first four months of 2026, an increase of 1.6 percentage points compared with the same period of the previous year. On the import side, the EU represented 55.6% of total goods imports. This is the underlying reality of Serbia’s external accounts: whatever the diplomatic language of multi-vector positioning, the country’s trade model is still deeply European. Germany, Italy and other EU markets are not just trading partners; they are balance-of-payments stabilisers.
Services continue to perform the role that has become increasingly important for Serbia over the past decade. The services surplus reached EUR 923.0mn in January–April 2026, up EUR 139.8mn, or 17.8%, from a year earlier. Services exports came in at EUR 4.9bn, rising 3.8%, while services imports reached EUR 4.0bn, up only 1.0%. In April alone, the services surplus was EUR 259.0mn, more than double the level recorded in the same month of 2025.
This services cushion changes the way Serbia’s external account should be read. The country is not simply an importer of capital goods and energy financed by foreign direct investment. It is also a services exporter with a meaningful foreign-exchange-generating base. ICT services remained the largest export category at EUR 1.51bn in the first four months, while other business services rose to EUR 1.31bn. Transport exports reached EUR 783.7mn, increasing 9.0% year on year. Travel exports softened slightly to EUR 800.2mn, down 1.1%, but remained large enough to keep tourism and travel income relevant to the external account.
The services geography is also telling. In the first quarter of 2026, Serbia exported most services to the United States, Germany and the United Kingdom, while the largest service imports came from Greece, Germany and Switzerland. This is not the geography of a closed regional economy. It is a hybrid model: goods exports are heavily EU-linked, while services exports reach deeper into Anglo-American and Western European demand pools. For investors, this gives Serbia a broader external-revenue base than the goods account alone would suggest.
The income account is the less comfortable part of the story. The primary-income deficit widened to EUR 1.4bn in the first four months, up 9.3% year on year. In April, the primary-income deficit reached EUR 451.5mn, 4.4% higher than a year earlier, mainly because of higher net outflows linked to direct investment income. This is the natural cost of an FDI-financed growth model: as foreign-owned companies become profitable, reinvested earnings and dividend-related income outflows rise.
That does not make FDI undesirable. It does mean Serbia’s external account will increasingly have to earn its way through higher exports, higher-value services and stronger productivity. A country can finance industrial expansion with foreign capital, but the balance-of-payments bill eventually shows up in the primary-income line. The more profitable the foreign-invested sector becomes, the larger the income debit can be. Serbia’s challenge is to ensure that the export and productivity gains from that capital exceed the income outflows it generates.
Secondary income remains Serbia’s stabilising social and macroeconomic buffer. The secondary-income surplus rose to EUR 1.9bn in January–April 2026, up 17.3% year on year. Net remittance inflows reached EUR 1.6bn, while the secondary-income surplus in April alone stood at EUR 555.1mn, up 27.5%. Germany accounted for 25.3% of remittances in the first quarter, followed by Switzerland at 12.7%, Austria at 9.5% and Croatia at 6.1%.
The remittance data confirm another structural reality. Serbia’s labour diaspora remains a major balance-of-payments asset. Remittances are not merely household support; they finance consumption, support the dinar, reduce external financing pressure and partially offset the goods deficit. In the first four months, personal transfers covered 89.4% of the goods-account deficit, compared with 50.6% a year earlier. That is a major improvement in external coverage, even though it also underlines how dependent Serbia remains on income flows from workers abroad.
The financial account gives the more complicated investor signal. Excluding changes in foreign-exchange reserves, Serbia recorded a net financial-account outflow of EUR 1.0bn in January–April 2026. The main driver was a EUR 1.3bnoutflow linked to trade credits and advances. At the same time, Serbia received EUR 600.4mn in foreign direct investment inflows. After accounting for residents’ investments abroad, net FDI inflows amounted to EUR 357.0mn, covering close to 90% of the current-account deficit.
This is a healthier ratio than the headline FDI figure alone might suggest. Serbia does not need spectacular FDI inflows to cover the current-account deficit when the deficit itself is much smaller. But the decline in gross FDI inflows from EUR 1.07bn in the first four months of 2025 to EUR 600.4mn in the same period of 2026 deserves attention. It may reflect project timing, lower one-off inflows, or more cautious investor sequencing. Either way, the balance-of-payments structure is less dependent on large FDI inflows than before, but the investment story has become more selective.
Preliminary 2025 data show where FDI has been going. Manufacturing accounted for 22.2% of inflows, mining and quarrying for 20.1%, professional, scientific, innovative and technical activities for 18.5%, construction for 16.0%, wholesale and retail trade including repair of motor vehicles and motorcycles for 13.6%, and financial and insurance activities for 5.0%. This distribution is strategically important. Serbia is not attracting only real estate, retail or low-value services. Its FDI base is tied to manufacturing, mining, technical activities and construction, the sectors that define industrial upgrading and infrastructure intensity.
Yet this sector mix also creates policy pressure. Mining inflows raise environmental, permitting and ESG questions. Manufacturing inflows raise questions of energy cost, grid reliability, CBAM exposure, labour availability and supplier depth. Construction inflows are sensitive to interest rates, urban demand and public infrastructure cycles. Professional and technical activities depend on skills, tax stability and Serbia’s ability to retain high-value labour. The next phase of Serbia’s FDI story will therefore be less about headline inflow volumes and more about project quality, energy security and regulatory credibility.
Other financial-account movements show a more active corporate and banking balance sheet. Serbia recorded a EUR 982.2mn net inflow from financial loans, driven by higher net borrowing by enterprises of EUR 370.3mn, banks of EUR 314.8mn and government of EUR 297.1mn. Portfolio investment, by contrast, recorded a net outflow of EUR 244.0mn, while currency and deposits produced a EUR 771.5mn net outflow. These flows are not necessarily alarming, but they show that the financing side of the external account is more fluid than the current-account headline.
The reserve indicators remain strong enough to absorb volatility. Foreign-exchange reserves covered 6.6 months of imports of goods and services, while reserves stood at 31.7% of GDP, 161.7% of M1 and 305.7% of short-term debt. These are comfortable external liquidity metrics by emerging-market standards. They give the National Bank of Serbia room to manage volatility and preserve confidence in the dinar without turning every monthly balance-of-payments movement into a market event.
The broader reading is that Serbia’s external position has become less fragile, but more demanding. The country is benefiting from an export recovery in automotive manufacturing and mining, a durable services surplus, strong remittances and lower energy-import pressure. At the same time, it faces a rising primary-income deficit, weaker FDI inflows than a year earlier, portfolio outflows and dependence on a limited number of industrial export engines.
For the rest of 2026, the decisive variables will be whether automotive exports maintain momentum, whether energy-import savings persist, whether services continue to generate a surplus near the current run rate, and whether FDI accelerates as investment projects move from negotiation to execution. A simple annualisation of the first four months would imply a much smaller current-account deficit than in previous pressure periods, but such a projection would be too mechanical. Serbia’s external account is seasonal, energy-sensitive and investment-cycle-sensitive.
Still, the direction is clear. Serbia enters the middle of 2026 with a stronger external position than a year ago. The deficit is smaller, its financing looks manageable, and the country’s reserve coverage remains solid. The stronger story is not that Serbia has eliminated its external vulnerabilities. It is that the vulnerabilities have become more specific: energy, industrial concentration, income outflows and the quality of future FDI. Those are manageable risks, but they require a more disciplined investment model than the one Serbia could afford when cheap capital and abundant liquidity masked the cost of structural imbalances.
The external accounts now reward productivity, export depth and services sophistication more than simple capital inflow. Serbia’s next balance-of-payments test will not be whether it can attract money. It will be whether the money it attracts builds an economy capable of earning enough foreign exchange to finance its own expansion.
