Serbia entered 2026 with a more stable inflation and external-trade profile, but the composition of growth is becoming increasingly dependent on household consumption, real-wage gains and retail credit. The Ministry of Finance’s latest macroeconomic dataset points to 3 per cent real GDP growth in 2026, up from an estimated 2 per cent in 2025, while inflation has returned to levels compatible with monetary stability and exports are expanding significantly faster than imports.
The headline improvement masks a less balanced investment picture. Foreign direct investment slowed sharply during 2025 and remained weak in the first four months of 2026. Corporate lending has also grown much more slowly than household credit. Serbia therefore appears to be moving from the investment- and export-capacity cycle that shaped much of the previous decade towards a more consumption-supported phase, even as the trade deficit narrows.
The Ministry estimates nominal GDP will reach RSD11.07tn in 2026, compared with approximately RSD10.39tn in 2025 and RSD9.75tn in 2024. The projected nominal increase of about 6.5 per cent combines 3 per cent real growth with an implied GDP deflator of approximately 3.4 per cent. That is a healthier relationship between real activity and prices than in the immediate post-energy-crisis period, when nominal expansion was driven much more heavily by inflation.
Measured in euros, Serbia’s GDP reached approximately €88.7bn in 2025, while GDP per capita rose to about €13,545. The increase from €83.3bn and €12,641 per capita in 2024 reflects both real growth and the stability of the dinar against the euro. The Ministry does not yet provide a euro-denominated GDP estimate for 2026, but the nominal dinar projection, combined with the current exchange-rate range, would place the economy close to or above €94bn.
This trajectory is credible, although the growth target depends on domestic demand remaining resilient. Serbia recorded average consumer-price inflation of 2.9 per cent in January–May 2026, down from 3.8 per cent in 2025 and 4.6 per cent in 2024. End-period inflation stood at 2.4 per cent, compared with 2.7 per cent at the end of 2025. Inflation has therefore moved much closer to the centre of the National Bank of Serbia’s target corridor, giving monetary policy more room to support activity without immediately destabilising the currency.
The disinflation process has also produced a substantial increase in household purchasing power. Average net salaries reached RSD119,504 in January–April 2026, while the Ministry’s dataset records 8.6 per cent real wage growth. Average net pay had already risen to RSD109,462 in 2025, from RSD98,143 in 2024. Pension payments averaged RSD56,847 in the latest reporting period, accompanied by reported real growth of 9 per cent.
These gains are important for consumption, construction, residential demand and domestically oriented services. They also help explain the acceleration in lending to households. Household credit increased from approximately RSD1.94tn at the end of 2025 to RSD2.08tn by May 2026, a rise of 7.2 per cent in five months. Lending to companies, by contrast, increased by only 0.8 per cent, from RSD2tn to RSD2.01tn.
Households now account for approximately 50.9 per cent of combined credit to companies and individuals, having overtaken corporate borrowers in the banking system’s domestic credit portfolio. Total credit increased by around 4 per cent to RSD4.09tn, but most of the expansion came from retail lending rather than corporate investment.
The distinction matters. Household credit can sustain consumption and housing demand, but it does not automatically expand industrial capacity, export productivity or energy infrastructure. The modest increase in corporate lending may reflect strong company liquidity and alternative financing sources, yet it may also indicate weaker appetite for capital expenditure, delays in large projects or caution among banks facing higher construction, permitting and execution risks.
The trade figures provide the strongest evidence that Serbia’s growth position improved during the opening months of 2026. Goods exports reached €14.7bn in January–May, an increase of 7.7 per cent from the corresponding period of 2025. Imports were considerably larger at €17.68bn, but grew by only 1 per cent.
As a result, the goods-trade deficit narrowed to €2.98bn. Based on the reported growth rates, the comparable deficit in the first five months of 2025 was approximately €3.86bn. The shortfall therefore declined by about €876mn, or almost 23 per cent.
Export coverage of imports improved from an estimated 78 per cent to 83.1 per cent. This is a material adjustment for an economy that has traditionally depended on imports of equipment, energy, intermediate inputs and consumer goods. It reduces the amount of foreign capital required to finance domestic expenditure and provides a stronger foundation for the current account.
Exports to the European Union reached €9.27bn, accounting for approximately 63 per cent of Serbia’s total merchandise exports. The EU remains the dominant market for Serbian manufacturing, metals, electrical equipment, automotive components, agricultural products and processed goods. This concentration provides access to the region’s largest commercial market, but it also exposes Serbia directly to European industrial demand, regulatory changes and the Carbon Border Adjustment Mechanism.
The composition of imports suggests that domestic production and investment have not stalled. Serbia imported €6.12bn of intermediate goods and €3.31bn of capital goods during January–May. Together, these two categories represented approximately 53 per cent of total goods imports. Intermediate-goods imports alone accounted for 34.6 per cent, while capital goods represented 18.7 per cent.
A restrained increase in imports alongside stronger exports can be positive when it reflects improved domestic substitution and higher export value. It becomes less favourable when capital-goods purchases slow because companies are postponing investment. The weak corporate-credit numbers and lower foreign direct investment mean the second possibility cannot be dismissed.
The current account recorded a deficit of €405mn in January–April 2026, a manageable figure compared with the annual deficits of €4.3bn in 2025 and €3.79bn in 2024. The 2025 current-account deficit was equivalent to approximately 4.9 per cent of GDP, compared with 4.5 per cent in 2024 and only 2.4 per cent in 2022.
The early-2026 narrowing reflects the stronger trade balance, although services, income payments, remittances and seasonal energy flows will determine whether the improvement survives over the full year. Serbia’s current account has often benefited from services exports and transfers while remaining structurally exposed to the goods deficit, dividend payments by foreign-owned companies and periods of high energy-import expenditure.
Foreign direct investment is the more immediate source of concern. Net FDI fell from approximately €4.6bn in 2024 to €2.28bn in 2025, a decline of just over 50 per cent. Its contribution fell from 5.5 per cent of GDP to around 2.6 per cent.
Only €357mn of net FDI was recorded in January–April 2026. This covered approximately 88 per cent of the current-account deficit during the same period, but the absolute amount remains modest compared with Serbia’s recent investment history. A mechanical annualisation would produce only about €1.07bn, although FDI flows are volatile and frequently concentrated around major transactions.
For most of the past decade, Serbia was able to finance its external deficit through FDI rather than debt-creating portfolio flows. Investment by companies such as HBIS, Zijin Mining, Continental, Bosch, Nidec, Brose, Michelin, Linglong and numerous automotive suppliers expanded manufacturing capacity and exports while supporting employment outside Belgrade. A prolonged decline in new investment would weaken that financing model and increase dependence on sovereign borrowing, bank funding, retained corporate earnings and remittances.
The change is especially relevant for Serbia’s next infrastructure cycle. Electricity transmission expansion, renewable-energy connections, storage, mining and processing projects, industrial decarbonisation and wastewater infrastructure all require substantial long-term capital. These projects also face permitting, grid-connection and execution constraints that can delay investment even when financing is available. A pipeline of announced projects does not translate automatically into productive capital formation when connection infrastructure and environmental approvals require several years.
The fiscal position provides Serbia with more room to absorb a temporary investment slowdown than it had a decade ago. General government debt declined from 46.9 per cent of GDP in 2024 to 44.7 per cent in 2025. The ratio has fallen by almost 24 percentage points from its 2015 peak of 68.4 per cent.
However, the fiscal deficit widened from approximately 2 per cent of GDP in 2024 to 2.4 per cent in 2025. Consolidated expenditure increased to 43.36 per cent of GDP, while revenue reached 40.93 per cent. The primary deficit expanded to around 0.76 per cent of GDP, from 0.26 per cent in 2024.
The gap between the total and primary balances indicates an interest burden of approximately 1.64 per cent of GDP, equivalent to around RSD171bn on the 2025 GDP base. Serbia’s debt ratio continued to decline because nominal GDP grew faster than the debt stock, but that mechanism becomes less powerful as inflation moderates. Future reductions will increasingly depend on primary-balance discipline rather than nominal expansion.
For sovereign credit pricing, the combination of sub-45 per cent public debt, lower inflation, a stable exchange rate and almost €30bn of foreign-exchange reserves remains supportive. These buffers reduce refinancing risk and strengthen Serbia’s position during episodes of European or emerging-market volatility. The widening fiscal deficit and lower FDI, however, limit the scope for spreads to compress solely on the basis of headline growth.
Foreign-exchange reserves increased from €29.01bn at the end of 2025 to €29.88bn in May 2026, a gain of about 3 per cent. Household foreign-currency savings rose from €16.16bn to approximately €16.51bn. The banking system therefore retains a deep euro deposit base, while the central bank has considerable capacity to manage currency liquidity and external-payment shocks.
The dinar remained almost unchanged against the euro. The end-period exchange rate moved from RSD117.282 per euro in 2025 to RSD117.418 in May 2026, a depreciation of only 0.12 per cent. The average rate was similarly stable at approximately RSD117.395 per euro. This stability has helped contain inflation, preserve the euro value of wages and GDP, and reduce debt-servicing volatility for borrowers with euro-linked obligations.
It also creates a competitive constraint. Serbian exporters cannot rely on currency depreciation to offset faster wage growth or higher compliance costs. Productivity, energy prices, automation and supply-chain integration must carry more of the adjustment. This pressure will become more visible in metals, fertilisers, cement and other carbon-intensive sectors as EU carbon costs increasingly affect commercial contracts.
Employment indicators remain stable rather than expansionary. Average employment stood at around 2.314mn people in January–May, close to the 2.319mn recorded in 2025. Registered unemployment averaged approximately 343,000, while the ILO unemployment rate was 8.9 per cent in the first quarter, compared with a 2025 four-quarter average of 8.7 per cent. The labour market is no longer delivering large employment gains, but wage growth remains rapid because of labour scarcity, public-sector adjustments, minimum-wage increases and competition for skilled workers.
Serbia’s 2026 macroeconomic position is therefore stronger in terms of inflation, trade coverage, reserves and public debt than the real growth number alone suggests. The vulnerability lies in the sources of expansion. Exports are rising by 7.7 per cent, but corporate credit has increased by less than 1 per cent and early-year FDI is only €357mn. At the same time, household lending, real wages and pensions are rising quickly.
That mix can sustain 3 per cent growth in the near term. It offers less certainty about the next cycle of export capacity unless investment in industrial technology, grid infrastructure, energy security and higher-value processing begins to accelerate. Serbia’s macro buffers are buying time, while the productive use of that time will determine whether the economy moves beyond consumption-supported stability into a new investment-led phase.
