Serbia’s economy started 2026 with moderate growth, but the composition of that growth sends an important signal. Real GDP increased by 3.0% year on year in the first quarter, broadly in line with the National Bank of Serbia’s expectations. But the expansion was led mainly by services, while industry and construction made slightly negative contributions.
The NBS presentation shows that trade, tourism and catering were the main service-sector drivers. Real retail trade turnover rose 8.3% year on year, while tourist arrivals increased 7.8%. These figures point to resilient domestic demand, stronger household spending and recovery in consumer-facing services. In a period of global uncertainty, this gives Serbia a useful growth cushion.
The labour and wage data support that reading. Average net wages reached RSD 117,276, or around €999, in January–February 2026, up 11.2% nominally and 8.5% in real terms. Strong real wage growth supports retail, travel, hospitality, housing demand and household credit. It also helps explain why household loans increased 20.9% year on year in March.
But a services-led growth model has limits. It can support short-term GDP, fiscal revenues and employment in selected sectors, but it does not automatically improve export capacity or productivity. Serbia’s sovereign story depends not only on consumption and services, but also on manufacturing, tradable-sector FDI and export diversification.
That is why the weaker industrial signal matters. Industrial production declined 0.8% quarter on quarter in the first quarter, manufacturing slipped 0.4%, mining fell 3.2%, and construction was weak. These are not crisis numbers, but they show that the productive side of the economy was not the main driver of growth at the start of the year.
The longer-term manufacturing story remains stronger. Goods exports rose 8.7% in 2025 and 7.4% year on year in the first quarter of 2026. Manufacturing exports increased 9.1%, while motor vehicle exports rose 59.0%. This confirms that Serbia’s industrial export base has become more diversified and more resilient than before.
Foreign direct investment explains part of that resilience. Between 2018 and 2025, Serbia attracted €28.4bn in total FDI, with nearly 60% going into tradable sectors and around €8.4bn into manufacturing. This investment has helped build export capacity, supplier networks and industrial employment. It is also one of the reasons Serbia secured investment-grade recognition from S&P.
The rating story therefore depends on keeping manufacturing and tradables strong. Services can drive GDP in a given quarter, but rating agencies and bond investors look at external sustainability, export capacity, FDI quality and productivity. Serbia’s current-account deficit was only 0.8% of GDP in the first quarter, but the NBS expects it to widen to 5.9% of GDP in 2026. A strong manufacturing export base is essential if that widening is to remain manageable.
Construction will also need to recover if the 2027 growth acceleration is to materialise. The NBS expects GDP growth to rise to 4.5% in 2027, supported by Expo-related investment and services exports. For that to happen, public investment must move efficiently through construction, infrastructure, logistics and urban projects. Weak construction in early 2026is not decisive, but it shows that execution cannot be assumed.
The credit cycle can either reinforce or weaken the growth model. If bank lending increasingly finances investment, export-oriented companies, energy infrastructure, logistics and productive SMEs, it can strengthen Serbia’s medium-term growth base. If it remains too concentrated in household cash loans, mortgages and working-capital liquidity, it may support demand without lifting productivity enough.
The best growth model for Serbia is not services versus manufacturing. It is a balanced model in which services, infrastructure and industry reinforce each other. Services provide domestic demand and export potential in ICT, business services, tourism and transport. Manufacturing provides tradable output, foreign-currency earnings and productivity. Infrastructure connects the two.
The first quarter of 2026 showed that Serbia can still grow when services are strong and industry is uneven. But the country’s rating story, external balance and investment-grade credibility require manufacturing and tradables to remain central. Serbia’s next growth phase will be stronger if services momentum is matched by a renewed industrial and construction contribution.
