Serbia’s external accounts have improved in 2026, but the gains look more like a cautious adjustment than a full‑fledged turnaround. The trade deficit has narrowed sharply in the first months of the year, shrinking by roughly two‑thirds year‑on‑year thanks to a combination of stronger exports and slower import growth. The current‑account balance has followed suit, easing pressure on the country’s external‑financing position. Yet, these improvements coincide with a marked slowdown in foreign‑direct‑investment (FDI) inflows, creating a delicate and somewhat fragile equilibrium.
For much of the early 2020s, FDI was Serbia’s growth engine. Large‑scale manufacturing projects, infrastructure deals, and agribusiness investments poured in, pushing net FDI inflows close to 5 billion euros in 2024. The country carved out a niche as a low‑cost, pro‑investment base in Southeast Europe, with a growing pool of skilled labour and proximity to the European Union. But in 2026, the mood has shifted. Global investors are facing higher borrowing costs, slower growth, and a more uncertain trade environment, and this has translated into a more cautious approach to new projects in Serbia. Available data suggest that FDI inflows in the first quarter of 2026 are significantly lower than in the same period of the previous year.
Despite the slowdown, interest remains strong in certain sectors. Renewable‑energy projects, IT‑driven services, and agribusiness continue to attract capital, as they benefit from Serbia’s relatively low labour costs, improving digital infrastructure, and access to EU markets. This is shifting the FDI mix from broad‑based manufacturing toward more specialized, higher‑value‑added activities. The trade‑balance picture mirrors this trend: exports of manufactured goods—especially in automotive components, electronics, and processed foods—have held up well, while import growth has been tamed by weaker domestic demand and a more restrained fiscal stance.
The risk is that these gains are easily reversed. If eurozone demand slows further or if global trade tensions escalate, Serbia’s export‑oriented sectors could be hit hard. The IMF has already downgraded the country’s 2026 growth forecast to around the low‑3% range, citing weaker external demand and tighter financial conditions. In that context, the current‑account improvement looks more like a temporary relief than a structural fix. Serbia’s external‑sector story is therefore one of cautious optimism: the trade‑deficit is narrowing, the current account is stabilizing, but the country remains vulnerable to global shifts it cannot control.
