Serbia’s external trade data for the first quarter of 2026 look encouraging at first glance. Goods exports rose 7.1% to €8.713bn, imports were almost flat at €10.314bn, and the trade deficit narrowed by 25.4% to €1.601bn. Export-import coverage improved to 84.5%, up from 79.1% a year earlier. In a small open economy exposed to European demand, that is a meaningful improvement.
The question is what kind of improvement it is. A narrower trade deficit can signal stronger export competitiveness, better sectoral performance and improved external balance. It can also reflect weaker import appetite caused by slower industrial activity. Serbia’s Q1 data contain both elements. Exports did recover, but industrial production remained 0.8% lower year-on-year. That makes the trade story positive, but not unambiguously strong.
March was the strongest month. Total goods trade rose 10.2% year-on-year, adding €691.2mn. Exports reached €3.374bn, up 15.4%, while imports rose 6.3% to €4.066bn. The monthly deficit fell 23.2% to €691.3mn. That points to a clear improvement in external performance, helped by the recovery in manufacturing exports.
Manufacturing remains the core of Serbia’s goods-export model. It accounted for 87.8% of total goods exports in the first quarter and recorded 9.1% cumulative export growth. In March alone, manufacturing exports rose 18.6%. Mining exports also performed strongly, rising 25.4% in the first quarter, although from a smaller base. Electricity and agricultural exports declined, showing that the export recovery was not universal.
The strongest structural question remains Serbia’s dependence on the European industrial cycle. The EU accounted for 59.2% of total trade, while Germany remained the largest single partner with a 13.2% share. That creates both stability and exposure. Germany, Italy and other EU markets provide scale, demand and supply-chain integration. They also transmit weakness quickly when European manufacturing slows.
Serbia’s export structure still relies heavily on industrial components, vehicles, electrical equipment, metals, machinery, pharmaceuticals and intermediate goods. The positive contribution from motor vehicles, trailers and semi-trailers was particularly important, with output rising 51.5% in the first quarter and adding 2.84 percentage points to manufacturing. This strengthens the trade outlook, but it also increases dependence on automotive supply-chain cycles.
The import side deserves careful interpretation. Imports rose only 0.3% in the first quarter. That helped narrow the deficit, but it may also indicate softer demand for intermediate goods, equipment and energy-linked inputs. In a fast-growing industrial cycle, imports usually rise with production and investment. Flat imports alongside weak industrial production suggest that part of the external improvement came from reduced pressure on the import bill rather than only stronger export performance.
The persistent deficit with China remains another structural feature. Serbia imports a large volume of consumer goods, equipment and intermediate products from China, while its strongest surpluses are often generated with neighbouring markets such as Montenegro and Bosnia and Herzegovina. This creates a regional-export cushion, but it does not remove the deeper asymmetry with Asian supply chains.
For investors, the Q1 trade data are constructive because they show that Serbia can improve external balances without a currency shock or demand collapse. But the quality of the adjustment matters. A trade deficit narrowed by stronger exports is a productivity signal. A trade deficit narrowed by weak imports is a caution signal.
Serbia’s export recovery is real, especially in manufacturing. The narrower deficit is useful for macro stability. The next test is whether exports can continue to grow while imports recover through investment and industrial production. That would be the stronger version of external rebalancing: not a smaller economy buying less, but a more competitive economy selling more.
