Serbia ended the week with a reaffirmed positive sovereign credit outlook, continued expansion in bank lending and resilient consumer demand, while policymakers maintained a cautious monetary stance amid persistent inflation pressures. At the same time, developments in the energy sector highlighted the growing importance of electricity networks and grid infrastructure as renewable capacity continues to expand.
- Central bank maintains policy stance as lending expands
- Positive sovereign outlook follows international bond issuance
- Power network investment gains importance
- Manufacturing investment and business representation
- Border infrastructure and transport developments
- Tourism maintains growth despite rising operating costs
The latest economic indicators point to stable business conditions rather than an acceleration in growth. Existing international manufacturers continue to increase production capacity, while investment priorities are increasingly shifting toward energy infrastructure, logistics and electricity networks that will support future industrial development.
Central bank maintains policy stance as lending expands
The National Bank of Serbia (NBS) left its monetary policy settings unchanged on 9 July, keeping the key policy rate at 5.75%, the deposit facility at 4.50% and the lending facility at 7.00%.
Annual consumer inflation measured 3.5% in May, remaining within the central bank’s target corridor of 3% ±1.5 percentage points, although core inflation continued to hover near the upper limit of the permitted range. According to the NBS, inflation is expected to temporarily exceed the target ceiling around the end of 2026 and the beginning of 2027, before returning to the target range by mid-2027.
Economic activity remained resilient during the first part of the year. Real GDP expanded by 3.2% year on year in the first quarter, while lending to companies and households increased 16.4% year on year in May. Retail activity continued to outperform industrial output. Retail turnover rose 6.2% in real terms in May compared with the same month a year earlier, following cumulative real growth of 7.5% during the first five months of 2026. By comparison, industrial production increased only 0.3% year on year in May.
Positive sovereign outlook follows international bond issuance
On 10 July, Fitch Ratings affirmed Serbia’s sovereign credit rating at BB+ with a positive outlook, leaving the country one step below investment-grade status under Fitch’s methodology. Among the other major agencies, S&P Global Ratings continues to assign Serbia an investment-grade BBB− stable rating, while Moody’s maintains a Ba2 stable assessment.
The positive Fitch outlook follows Serbia’s recent international borrowing programme and supports the country’s refinancing profile, although exposure to external financing conditions, exchange-rate movements and global interest rates remains. Central government public debt reached RSD 4.83 trillion, or approximately €41.1 billion, at the end of May, representing 43.7% of projected GDP. General government debt stood at 44.0% of GDP.
The increase during the month primarily reflected settlement of the international bond transaction launched on 28 April rather than deterioration in fiscal operations. The financing package comprised a €1 billion five-year eurobond carrying a 4.25% coupon, a €900 million 12-year green bond issued at 4.875%, and a $1.25 billion 10-year bond subsequently hedged into euros with an effective euro coupon of approximately 4.66%. Investor demand exceeded €8 billion. Despite the moderate debt ratio, the currency structure of public liabilities remains significant, with 79.7% denominated in foreign currencies, including 62.9% in euros and 11.3% in US dollars.
Power network investment gains importance
Conditions in the electricity market remained relatively firm despite a decline in wholesale prices. The Serbian day-ahead electricity price for delivery on 10 July fell to €94.24/MWh from €106.01/MWh recorded one day earlier, while traded volume reached approximately 15,944 MWh. Prices nevertheless remained above levels seen during the spring, reflecting seasonal cooling demand, reduced flexibility from thermal generation and regional competition for available electricity supply.
Speaking on 11 July, Minister of Mining and Energy Dubravka Đedović Handanović said Serbia now has approximately three times more installed renewable-energy capacity than it had in 2022. She added that further renewable expansion must be coordinated with development of transmission and distribution infrastructure. The continued increase in renewable generation places greater emphasis on electricity grids, battery storage, balancing systems, forecasting capabilities, congestion management and SCADA-based operational control as supporting infrastructure for future energy investments.
Manufacturing investment and business representation
Automotive electronics manufacturer AUMOVIO Serbia is continuing to expand operations at its production facility in Kać, where it manufactures advanced components for international automotive companies. The company employs more than 2,830 people, including a large number of engineers. The Serbian government stated that additional investment at the facility has exceeded initial plans, although it did not disclose an updated capital expenditure figure.
On 10 July, the Serbian Association of Employers established a European Integration Committee to strengthen business representation during Serbia’s EU accession process and engagement with European regulations affecting exporters, including CBAM, product standards, sustainability reporting and supply-chain due diligence requirements.
Border infrastructure and transport developments
Serbia and Bulgaria signed a memorandum on 9 July establishing the new Gradina 2–Kalotina 2 joint border crossing. Approximately 3 million passengers travelled through the existing Gradina–Kalotina crossing during the previous six months. The new crossing will initially serve mainly Serbian and Bulgarian citizens together with cross-border traffic.
In the rail sector, passenger operator Srbijavoz announced an average domestic fare increase of approximately 10% effective from 15 July. Passengers purchasing tickets online will continue to receive a 5% discount, while travellers buying tickets on board trains where station ticket offices were available will pay an additional RSD 500 charge. Annual season tickets and reservation fees will remain unchanged.
Tourism maintains growth despite rising operating costs
Tourism activity continued to expand during May, with approximately 470,000 tourist arrivals, representing a 7.4% year-on-year increase. Total overnight stays increased 5.5% to 1.21 million during the month.
At the same time, operating costs in the hospitality sector continued to rise. Catering and hospitality service prices increased 5.6% year on year in June, while food prices in hotels and restaurants climbed 7.2% compared with the same month a year earlier.
