Serbia avoided a sharper slowdown at the start of 2026, according to the latest assessment presented by the National Bank of Serbia. Real GDP rose 3.0% year on year in the first quarter, broadly in line with the central bank’s February expectations. The NBS expects GDP growth of 3.0% for 2026, followed by an acceleration to 4.5% in 2027. The projections are linked to the Expo-related investment cycle and service exports.
- Inflation remains contained but policy stays cautious
- Lending accelerates while banks report low non-performing loans
- External balance improves early in 2026 as deficits widen later
- Diversified exports, FDI inflows and FX reserves support funding resilience
- Dinar stability measures continue alongside fiscal restraint indicators
- Sovereign finances show deficits but debt ratios decline; ratings remain investment grade access-focused
The NBS describes a shift toward a more project-driven growth phase. It says the next stage depends on whether major infrastructure and Expo-linked works translate into productive capacity rather than only temporary demand. Future growth is tied to consumption, investment, higher disposable income, and continued implementation of projects under “Leap into the Future – Serbia Expo 2027”.
The NBS revised its 2026 growth projection from 3.5% to 3.0%. It attributes the downgrade mainly to intensified geopolitical tensions, including the Middle East conflict, which has pushed up energy prices and weighed on investment and consumer confidence. The same external pressures reduced the 2027 projection from 5.0% to 4.5%.
Inflation remains contained but policy stays cautious
Inflation is still broadly contained, though the central bank’s data show a less comfortable profile. Average inflation in 2025 was 3.8%, while December inflation was 2.7%. Inflation stayed below the central target value in the first quarter of 2026 but accelerated to 3.3% year on year in April due mainly to higher global oil prices and their transmission into domestic petroleum product prices.
Core inflation remained slightly above 4%, reaching 4.4% in April, driven mostly by services. The NBS says inflation expectations remain anchored within the target range of 3% ± 1.5 percentage points. One-year-ahead expectations in the financial sector were 3.5% in April in the Ninamedia survey and 3.8% in May in the Bloomberg survey, while medium-term expectations were between 3.0% and 3.5%.
The NBS flags a risk that inflation could temporarily move above the upper bound of the target range at the end of 2026 and beginning of 2027, partly due to a low base and partly due to higher global energy and commodity prices. It expects inflation to return to the target range by mid-2027 supported by restrictive monetary policy, weaker external cost pressures, and slower real wage growth aligned with productivity.
The reference interest rate remained unchanged in May at 5.75%. The central bank’s stance is described as conservative, aiming not to overtighten into moderate growth conditions while also not underreacting to external shocks. It says any expected increase in inflation should be temporary and limited, with readiness to use available instruments if secondary effects intensify.
Lending accelerates while banks report low non-performing loans
The presentation highlights accelerating credit activity alongside a cautious monetary stance. Lending to the private sector increased to 16.9% year on year in March. Household loans rose by 20.9%, while corporate loans increased by 12.0%.
Within households, cash loans grew by 24.0% and housing loans by 20.2%. Growth was supported by measures for lower-income citizens and the “Housing Loans for Youth” programme . For corporates, liquidity and working-capital loans rose by 13.5%, while investment loans increased by 12.5%.
The banking sector enters this phase with reported strength based on asset-quality and capital metrics. The non-performing loan ratio stood at only 2.09% in March 2026, while the capital adequacy ratio was 19.5%, above the regulatory minimum of 8.0%. The NBS links capacity to support growth with disciplined underwriting and limits on household leverage rising faster than income.
External balance improves early in 2026 as deficits widen later
The NBS reports that Serbia’s current account deficit was limited early in 2026, providing an external stabiliser for investors . In the first quarter of 2026 it was €179.3 million, equal to 0.8% of GDP. This compares with a deficit that was €472 million higher in the same period of the previous year.
The improvement was supported by exports of goods and services rising by 6.4% year on year, while imports grew by 2.5%. The goods and services deficit stood at a record-low 2.4% of GDP in the first quarter, well below a five-year average of 6.7%. For full-year dynamics, however, the NBS expects greater import intensity as investment and consumption accelerate.
The central bank expects the current account deficit to widen to 5.9% of GDP in 2026 before narrowing to 4.0% in 2027. It cites higher energy prices, investment needs, and rising disposable income for 2026, while pointing to services exports connected to Expo for 2027.
Diversified exports, FDI inflows and FX reserves support funding resilience
The export performance remains part of Serbia’s external story based on goods trade figures cited by the NBS . Goods exports grew by 8.7% in 2025, despite weaker demand from the EU and regional markets. In the first quarter of 2026 goods exports increased by 7.4% year on year, while imports rose only 3.0%.
The NBS highlights production and geographical diversification and points to export-oriented investments in processing industries and automotive-related branches . Foreign direct investment also remains material: total FDI between 2018 and 2025 amounted to €28.4 billion, with almost 60% directed into tradable sectors and around €8.4 billion into manufacturing.
The NBS reports that FDI inflow was €3.5 billion in 2025, while net inflow reached €2.3 billion. Inflows were supported by resident investment abroad contributing to net figures; for January-March 2026 net FDI inflows were €192.4 million, covering the current account deficit, while total inflows reached €369.3 million.
The central bank also cites foreign exchange reserves as a stabiliser . At end-April 2026 reserves were €28.2 billion, covering slightly less than seven months of goods and services imports and around 160%% of M1 money supply . It notes that gold holdings have risen since 2012 to 54 tonnes, with gold’s value exceeding 24%% of total reserves.
Dinar stability measures continue alongside fiscal restraint indicators
The exchange-rate framework remains central to stability metrics cited by the NBS . The dinar weakened against the euro by only 0.2%% during 2025 and by just 0.1%% from early 2026 through April . The NBS was a net seller of foreign currency worth €580 million% on-market activity in 2025.
NBS sales totalled €1.205 billion% net over the first four months of 2026, with interventions on the purchase side reported for April . Dinarisation trends are also cited as reducing balance-sheet risk over time: household receivables denominated in dinars rose from 35.1%% in 2012 to 56.5%% in March 2026.
Dinar savings increased by almost 8%% during 2025 and by RSD14.9 billion% over January-April 2026, reaching RSD221 billion. Deposits denominated in dinars for corporates and households amounted to45.0%% in March 2026, up25.7 percentage points% from end-2012.
Sovereign finances show deficits but debt ratios decline; ratings remain investment grade access-focused
The fiscal section reports deficits alongside continued public debt reduction indicators . In 2025 general government recorded a deficit of RSD252.3 billion, or2.4% of GDP, with capital expenditure at RSD715 billion, or6.9% of GDP. In Q1 2026, the general government deficit reached RSD112.9 billion.
NBS data show revenues rising by13.5% year on year, driven by social security contributions, VAT, and corporate income tax . Expenditures increased by21.9% % reflecting higher capital expenditure plus spending on wages and pensions . Public debt ratios remain on a downward path with end-March 2026 central government debt at41.7% of GDP%.
Total general government debt was reported at42.0% of GDP% at end-March 2026, down2.7 percentage points % from end-2025 . The revised fiscal strategy projects deficits at3.0% of GDP % for both 2026 and 2027 before narrowing to2.%? %?
