Economists at Makroekonomske analize i trendovi (MAT) estimate that Serbia’s real gross domestic product rose by approximately 3.5% year-on-year during the first four months of 2026. The assessment is based on activity that strengthened beyond the pace seen at the start of the year, despite a challenging external environment.
The MAT view aligns with official figures showing 3.2% economic growth in the first quarter of 2026. That outcome was reported as stronger than many European peers and above expectations held earlier in the year by several market observers.
Industrial output and manufacturing drive the acceleration
A key factor behind the stronger performance has been the recovery of industrial activity. Industrial production in April increased by 3.4% compared with a year earlier, while cumulative growth for the January–April period returned to positive territory. Manufacturing is described as the main driver, supported by improved operating conditions at major industrial facilities and stronger export demand from European markets.
Operations in Serbia’s oil refining sector have also normalized gradually. Earlier disruptions at the Pančevo refinery weighed on industrial output, but restored production has improved manufacturing indicators and supported broader economic activity. The rebound is cited as an example of how changes at a small number of strategically important industrial assets can affect national statistics.
Trade dynamics and retail demand support activity
External trade has become more supportive during early 2026. In the first quarter, merchandise exports expanded substantially faster than imports, improving Serbia’s trade coverage ratio and easing pressure on the external balance. Export-oriented manufacturing, automotive production, machinery, electrical equipment and industrial processing are listed among contributors to growth.
Domestic demand has continued to provide another element of expansion. Retail trade indicators remained robust, supported by rising wages and relatively stable inflation. Serbia maintained one of Europe’s stronger retail growth performances, reflecting resilient household consumption amid international uncertainty.
Wages, inflation and uneven investment trends
The labor market backdrop remains supportive for household spending. Double-digit wage growth over the past year increased purchasing power, while inflation stayed largely within the target corridor set by the National Bank of Serbia. This combination preserved real income growth and helped sustain consumer spending.
Some sectors show less consistent momentum. Construction activity and parts of industry continue to display volatility linked to project timing and broader regional and global uncertainties. Investment flows have also been more uneven than in previous years, following a slowdown in foreign direct investment during 2025.
Infrastructure plans and EXPO 2027 factor into outlook
Serbia’s outlook is tied to major investment cycles expected to influence demand over coming years. Large public infrastructure projects and preparations for EXPO 2027 are expected to support construction, services and domestic demand. These investments are also expected to matter as policymakers seek to offset weaker growth in parts of Europe alongside geopolitical uncertainty affecting energy markets and trade flows.
For investors, the latest MAT estimate is presented as evidence of acceleration from earlier readings. Growth was estimated at about 1.9% for the first two months of the year and at 3.2% in the first quarter, with momentum described as strengthening further during April.
The composition of growth is also highlighted as shifting toward factors beyond consumption. Export competitiveness, industrial modernization, energy infrastructure investment and productivity improvements are expected to play a larger role than pure consumption growth. Manufacturing recovery—especially in export-oriented segments—is described as important for maintaining growth above 3% while supporting external stability.
The early-2026 picture combines recovering industrial production, resilient consumer spending, improved export performance and continued infrastructure investment as Serbia moves toward EXPO 2027. The same developments are linked to deeper integration with European markets.
