Serbia’s macro-financial position remained resilient in the first quarter of 2026, supported by positive economic growth, contained inflation, a stable dinar and strong foreign-exchange reserves. The less favourable signals came from slower foreign direct investment, a wider fiscal deficit and continued foreign-currency exposure in public and private debt.
Real GDP increased 3.2% year on year, although seasonally adjusted quarterly growth was only 0.2%. The economy continued to expand, but the weak quarter-on-quarter movement showed limited momentum entering the second quarter.
Inflation remained close to the National Bank of Serbia’s target framework. Real wages continued to increase, supporting consumption, retail turnover and household lending.
Serbia retained an investment-grade BBB- rating from S&P. Fitch maintained BB+, one notch below investment grade, while Moody’s rated the sovereign Ba2.
The mixed ratings show that investors recognise Serbia’s improved fiscal and external buffers but continue to price institutional quality, external dependence and structural reform as credit constraints.
Serbia’s euro-denominated EMBIG spread averaged approximately 126 basis points, unchanged from 2025 and below 166 basis points in 2024. Risk premiums increased towards the end of the quarter as international-market volatility rose, but Serbia remained competitively priced against several higher-yielding regional sovereigns.
Euro money-market and ECB interest rates declined from their 2023–2024 highs. Lower rates should gradually reduce pressure on Serbian borrowers with euro-indexed debt, although banks may experience narrower interest margins.
The current-account deficit remained manageable and narrowed compared with the preceding year. Stronger merchandise exports and a larger services surplus reduced the economy’s external funding need.
Foreign direct investment weakened substantially. First-quarter net FDI was well below the levels recorded in 2024 and 2025. Serbia could absorb a temporary decline because the current-account gap also narrowed, but persistently lower FDI would affect construction, manufacturing capacity, mining and renewable-energy development.
Foreign-exchange reserves provided the principal external defence. Gross reserves covered 6.6 months of imports, while net reserves covered 5.5 months. Both were well above the conventional three-month adequacy standard.
The reserve position strengthened further after the reporting quarter. Gross NBS reserves reached €29.61bn by the end of June, providing 6.8 months of import coverage and covering 164.3% of the M1 money supply.
The dinar remained almost unchanged against the euro, supported by active NBS intervention. Relative stability limits imported inflation and protects borrowers with euro-indexed loans, but it requires sufficient reserves and credible monetary policy.
Fiscal conditions became less favourable. The rolling 12-month deficit moved towards approximately 3% of GDP, with public expenditure increasing faster than revenue. Capital projects, public wages, pensions and Expo-related spending are supporting activity but increasing the financing requirement.
Public debt remained below 50% of GDP, despite approaching €40bn in nominal terms. The ratio declined because nominal economic growth exceeded the increase in debt.
Approximately three-quarters of public debt remained foreign-currency denominated, while the dinar component was slightly above 20%. Around 70% of debt was external and 30% domestic.
This structure gives Serbia access to deeper international markets but exposes debt service to euro and dollar rates, sovereign spreads and currency movements. Expanding the dinar investor base would reduce that sensitivity.
Serbia enters the next investment cycle with credible financial buffers. The central policy task is to prevent fiscal expansion and rapid private credit from weakening the reserve, debt and inflation achievements that supported the sovereign’s first investment-grade rating.
