Serbia’s economy maintained a strong expansion pace in the first half of 2026, but the composition of growth shows increasing dependence on services, trade and fiscal contributions rather than broad-based strength across all productive sectors.
According to the July/August MAT assessment, available high-frequency indicators suggest that Serbia’s real GDP increased by approximately 3.6% year-on-year in the first five months of 2026, following 3.2% real growth in the first quarter.
The performance places Serbia among Europe’s faster-growing economies, although the underlying drivers remain concentrated. Services, wholesale and retail trade, and net taxes are providing the largest contributions, while industrial production, construction and energy-related sectors continue to face weaker conditions.
Services and trade provide the largest growth contribution
The latest assessment indicates that other services represented the strongest source of GDP growth, contributing around 2 percentage points to real economic expansion. Net taxes contributed approximately 0.7 percentage points, while wholesale and retail trade added around 0.6 percentage points.
Construction activity was recorded as slightly declining, while industry remained positive but weak. The current growth structure indicates continued economic expansion, but with a narrower production base. For investors and industrial companies, the distinction is important because overall GDP resilience does not necessarily translate into stronger demand across manufacturing, construction or industrial supply chains.
Industrial output shows limited momentum
Industrial production recorded only moderate growth during the first five months of 2026.
Total industrial production increased by 0.6% in January–May 2026 compared with the same period a year earlier.
Within industry:
- manufacturing production increased 1.6%;
- mining declined 0.5%;
- electricity, gas, steam and air-conditioning supply decreased 3.2%.
The energy sector showed particular weakness. In May 2026, electricity, gas, steam and air-conditioning supply production declined 8.6% year-on-year.
Manufacturing growth also slowed in May, reaching 1.4% year-on-year after stronger performance earlier in the spring. The data indicate that Serbian industry is not experiencing a broad contraction, but that growth is being supported by a limited number of industrial activities.
Manufacturing growth concentrated in selected sectors
The manufacturing sector’s performance has become increasingly dependent on specific industries. Production of motor vehicles and trailers emerged as one of the main positive contributors, while basic metals, electronics and several lower-technology manufacturing segments remained under pressure. According to the MAT assessment, manufacturing growth during the first five months of 2026 was concentrated in 11 of 24 manufacturing activities, representing 45.4% of the sector.
This means that more than half of manufacturing categories were not contributing fully to the expansion. The concentration of growth is significant for Serbia’s industrial strategy, particularly as the country seeks to strengthen exports, attract manufacturing investment and maintain competitiveness amid rising labour costs.
Energy sector remains structural challenge
Energy continues to represent one of the key constraints for Serbia’s industrial outlook. Electricity, gas, steam and air-conditioning supply accounts for just under 15% of total industrial production. Its longer-term trend has been declining for ten consecutive months, with an average monthly decrease of approximately 0.8%.
Hydropower production remains below its multi-year average, although output has improved compared with the previous year. The energy trend affects both industrial cost stability and the development of Serbia’s future low-carbon electricity supply framework, particularly for energy-intensive industries.
Growth outlook shaped by sector differences
Serbia’s economic expansion remains positive, but the latest indicators show a more selective growth pattern. Services continue to provide the largest contribution, while trade remains supportive. Manufacturing has areas of strength, particularly in automotive-related production, but broader industrial participation remains limited.
The economy continues to face exposure to energy conditions, metals markets, external demand and European Union regulatory pressures. The first-half 2026 data show an economy growing at a solid pace, but with expansion driven by a smaller group of sectors rather than a fully balanced increase across the entire production base.
