The European Bank for Reconstruction and Development (EBRD) has raised its forecast for Serbia’s economic growth in 2026 to 3.1% from 2.8%, while maintaining its 2027 projection at 3.8%. The revision follows stronger-than-expected economic activity, with recovering investment and household consumption supporting growth despite weaker industrial performance and increasing energy and financing costs. Serbia’s economy expanded 3.2% year on year in the first quarter, followed by 3.8% growth in the second quarter. Growth had slowed to 2% in 2025.
Consumption and investment support activity
Household consumption remains an important source of expansion, supported by higher wages, pensions and consumer spending. Investment has also started to recover after weaker performance in 2025. Tourism and preparations for Expo 2027 are providing additional economic activity.
The recovery is less uniform across the economy, however, with industry continuing to perform less strongly than domestic-demand sectors. This has created a divergence between overall GDP growth and conditions in parts of Serbia’s export-oriented manufacturing base. Energy-intensive companies are particularly exposed to weak European demand and higher input costs.
Financing costs add pressure
The EBRD’s wider September outlook points to tighter borrowing conditions as inflation, fiscal deficits and stronger global demand for capital contribute to higher long-term interest rates. For Serbia, where a significant portion of corporate lending and project financing is linked to euro interest rates, higher European borrowing costs can affect investment returns. The impact extends across factories, commercial real estate, renewable energy, logistics and infrastructure projects within Serbia’s investment pipeline.
Energy and logistics risks
Energy costs remain another source of pressure. Higher international oil-product prices have made commercial diesel imports less attractive, prompting Serbia to release fuel from mandatory reserves. At the same time, low Danube water levels have increased transport costs and disrupted regional logistics. Higher energy and transport expenses can affect manufacturers, construction projects and exporters by increasing operating and logistics costs.
Public investment supports demand
Fiscal policy is also contributing to economic activity through Serbia’s capital-investment programme covering roads, railways, energy infrastructure and Expo-related construction. Household-support measures and higher public spending are adding further demand. Public debt remains manageable by recent Serbian standards, while the increasing scale of expenditure places greater importance on the quality and timing of capital projects and their contribution to productive capacity.
FDI decline changes financing mix
Serbia’s current-account position has improved, providing additional external support. At the same time, fresh foreign direct investment inflows have declined sharply during 2026. The weaker FDI performance increases the importance of domestic corporate investment, bank lending, international financial institutions and capital-market financing as sources of investment funding.
The EBRD’s revised 3.1% growth forecast reflects stronger domestic demand and recovering investment following the 2025 slowdown, while weaker external conditions continue to affect industrial activity. Higher energy and financing costs alongside subdued European industrial demand remain relevant for exporters and energy-intensive manufacturers operating within the broader Serbian economy.
