Serbia’s external trade performance has opened 2026 with a mild contraction in overall activity, but with a notably improved internal balance—highlighting a shift in trade dynamics rather than a straightforward deterioration.
According to data released by the Statistical Office of the Republic of Serbia, total foreign trade reached approximately €11.52 billion in the first two months of the year, marking a 1.3% year-on-year decline.
The headline contraction, however, masks a more constructive underlying trend.
Exports rose to €5.3 billion, reflecting a 1.6% increase, while imports declined more sharply by 3.5%, falling to €6.2 billion. This divergence between export growth and import compression has driven a significant narrowing of the trade deficit to €936.3 million, down 24.9% year-on-year.
The improvement is further visible in the export-import coverage ratio, which increased to 84.9%, up from 80.7% a year earlier.
This pattern suggests that Serbia is entering a phase of trade normalization under tighter domestic demand conditions, rather than experiencing a structural export slowdown.
From a geographic perspective, the country remains deeply anchored to the European market. The European Union accounts for 59.9% of total trade, reinforcing Serbia’s role as a near-shore industrial extension of EU supply chains.
At the same time, regional trade continues to provide a stabilizing buffer. Trade with CEFTA partners generated a €419.9 million surplus, driven largely by exports of agricultural products, pharmaceuticals, beverages, vehicles, and electrical equipment.
The current data needs to be read in the context of January’s sharper contraction, when trade volumes dropped by around 11%, largely due to weaker imports and currency effects. The February stabilization indicates that the early-year shock is moderating, with trade flows gradually rebalancing.
What emerges is a dual-speed adjustment. On one side, import compression reflects softer domestic consumption and industrial input demand, likely linked to tighter financial conditions and ongoing adjustments in energy-intensive sectors. On the other, export resilience—albeit modest—signals continued integration into European manufacturing chains, particularly in automotive components, machinery, and agri-food exports.
The sharp reduction in the trade deficit is particularly relevant from a macro-financial standpoint. Lower external imbalances reduce pressure on Serbia’s current account and, by extension, its reliance on external financing. This dynamic tends to support currency stability and sovereign risk perception, especially in a period of elevated global interest rates.
At a sectoral level, the data aligns with broader industrial signals. Recent figures indicate that industrial production declined by 4.7% in January–February, with notable weakness in mining and energy segments. This contraction feeds directly into import demand for intermediate goods, reinforcing the downward adjustment in total trade volume.
However, the composition of exports—particularly continued strength in processed goods and machinery—suggests that Serbia’s industrial base is not contracting uniformly. Instead, it is undergoing selective rebalancing, where higher-value-added segments maintain external competitiveness even as legacy or energy-intensive industries face pressure.
Looking ahead, several variables will shape the trajectory of Serbia’s external trade in 2026. The pace of recovery in EU demand remains the dominant external driver, given the bloc’s near-60% share in Serbia’s trade structure. At the same time, energy prices and industrial output trends will determine the scale of import recovery in the second half of the year.
What is already clear from the early data is that Serbia’s trade performance is becoming less volume-driven and more balance-oriented. The modest 1.3% contraction in overall exchange is overshadowed by a nearly 25% reduction in the deficit, pointing to a more sustainable external position even in a softer macro environment.
