Serbia’s manufacturing sector closed 2025 on a positive note, with a reported growth rate of 1.1%. However, this figure masks significant disparities within the sector. According to the February 2026 edition of MAT – Macroeconomic Analyses and Trends, overall industrial production saw a modest increase of only 0.9%, while December manufacturing output experienced a sharp year-on-year decline of 8.3%. This growth was concentrated in just 12 out of 29 industrial branches, indicating that the positive outcome was not broadly representative of the entire manufacturing landscape.
The data highlights a duality in Serbia’s industrial performance for the year. Although there was no widespread collapse, the recovery was uneven, heavily reliant on a few strong sectors such as motor vehicles and rubber-plastics production. Meanwhile, several other significant branches either stagnated or faced declines, revealing both resilience and vulnerability within the manufacturing model. The growth observed in certain areas is increasingly susceptible to external factors, including geopolitical tensions and specific operational challenges within individual sectors.
The MAT report attributes Serbia’s industrial slowdown to global economic uncertainties, geopolitical risks, and weak demand from Europe. Notably, disruptions at the Pančevo refinery had a considerable impact on year-end dynamics. Conversely, the automotive sector emerged as a key driver for increased manufacturing output and export value during 2025. This juxtaposition illustrates how one politically sensitive branch adversely affected overall manufacturing while another export-oriented sector thrived due to European automotive demand.
Motor vehicle production stood out as the primary success story within the manufacturing domain. The introduction of the electric Fiat Grande Panda in Kragujevac at the start of 2025 significantly altered production dynamics, with average monthly growth rates reaching approximately 4% during the first ten months. By year-end, vehicle production levels were about 60% higher than the previous year’s average. This segment alone contributed 4 percentage points to December’s manufacturing growth and accounted for 1.8 percentage points of the annual growth figure.
However, this concentration raises concerns about stability. The automotive sector’s contribution indicates that other manufacturing branches collectively underperformed or remained stagnant enough to offset some of its gains. The overall narrative for Serbia’s manufacturing in 2025 is less about widespread improvement and more about reliance on specific sectors’ performance to counterbalance broader weaknesses.
Rubber and plastics production also played a vital role in supporting overall manufacturing growth, achieving a year-on-year increase of 7.5% in December and contributing 0.62 percentage points to monthly growth. For the entire year, this branch saw a substantial rise of 16.6%, adding 1.33 percentage points to annual growth. However, caution is warranted as momentum appeared to slow towards year-end due to external factors, including a U.S. import ban affecting tires from Linglong factory in Zrenjanin.
In contrast, the food industry represented a critical area where weakness hindered broader manufacturing growth. As the largest segment of Serbian manufacturing at nearly 20% share, food processing contracted by approximately 1.5% in 2025. Following a brief recovery in November, production fell again by 3.2% in December, reflecting a downward trend that had begun mid-2024.
The internal dynamics within food manufacturing revealed significant volatility; fruit and vegetable processing saw an alarming contraction of nearly one-third year-on-year in December. Other segments like oils and fats also faced declines, contributing to an unstable manufacturing environment where reliance on automotive and plastics for growth may not suffice for long-term stability.
The most pronounced negative impact came from coke and petroleum product production, which plummeted by 94.3% in December compared to the previous year, negatively impacting overall manufacturing by -8.85 percentage points. This decline can largely account for December’s total drop in manufacturing output and reflects broader geopolitical influences rather than purely economic factors.
The performance data illustrates a polarized manufacturing landscape where robust growth clusters exist alongside numerous underperforming branches. Many sectors lagged behind their 2024 averages, including textiles and pharmaceuticals, while stronger performers like wood processing and motor vehicles demonstrated resilience.
Technological analysis reveals that all contributions to manufacturing growth stemmed from medium-complexity branches linked to export supply chains rather than high-tech advancements, which saw declines instead. This shift indicates an increasing dependence on investment goods and industrial inputs over consumer goods production.
Looking ahead into early 2026, external conditions appear challenging with European Manufacturing PMI indices below expansion thresholds across key markets such as Germany and Italy. Such trends could jeopardize the sustainability of Serbia’s recent gains if they remain closely tied to these economies’ performance.
Overall, while Serbia’s manufacturing sector managed modest growth amidst adversity in 2025, it underscores an urgent need for diversification beyond a limited set of successful industries to enhance resilience against future disruptions.
