Serbia’s real gross domestic product increased by approximately 3.6% year on year in the first five months of 2026, according to the latest edition of Makroekonomske analize i trendovi (MAT). The estimate follows official first-quarter GDP growth of 3.2%, indicating that economic activity strengthened during April and May.
Growth during the January–May period was supported primarily by domestic demand, retail activity and services. Most sectors recorded real annual growth, while construction activity posted a slight decline. Industrial output remained positive but showed limited momentum. Total industrial production rose 0.6% in the first five months, while manufacturing increased 1.6%.
Basic Metals Weigh on Manufacturing Performance
The main drag on industrial activity shifted during the period. Earlier weakness had been associated with coke and petroleum-derivatives production, while basic metals became the principal factor limiting manufacturing growth, according to MAT.
Basic metals are linked to Serbia’s mining, smelting, construction-material, energy-intensive manufacturing and export-oriented industrial supply chains. Their performance affects a range of production activities connected to domestic investment and European markets. The limited increase in industrial output contrasted with stronger growth in services and consumer-facing sectors. Construction remained the only major sector identified by MAT as recording a year-on-year decline in real activity.
Exports Outpace Imports
Foreign trade continued to improve during the first five months of 2026, with exports increasing faster than imports. Exports covered approximately 83.1% of Serbia’s goods imports between January and May, compared with 77.9% during the same period of 2025.
The improvement in import coverage indicates a narrower imbalance between export performance and import demand, although Serbia continued to record a structural trade deficit. Higher export coverage reflected a more favourable relationship between foreign trade growth and domestic consumption than in periods when stronger household demand contributed to faster import growth.
Retail Activity Supports Domestic Demand
Retail trade remained one of the strongest contributors to economic growth. Serbia ranked near the top of Europe in real retail trade growth during the first five months of 2026, based on MAT’s analysis of Eurostat data. Household purchasing power continued to support consumer spending. In March, the average net wage was 10.9% higher than the average consumer basket and 115.1% above the minimum consumer basket. The wage and retail data indicate that household demand remained a key driver of GDP growth, while industry and construction provided a less consistent contribution.
Inflation Exceeds EU and Eurozone Averages
Serbia’s annual inflation rate reached 3.8% in May, according to MAT. The figure was above the European Union average of 3.3% and the eurozone average of 3.2%. Eight EU member states recorded higher annual inflation than Serbia. Romania reported inflation of 9.7%, followed by Bulgaria at 6.3% and Lithuania at 5.1%. Inflation remained within a range that continued to influence wage trends, consumer behaviour and monetary policy conditions.
Central Bank Forecast Remains More Cautious
The National Bank of Serbia reduced its forecast for real GDP growth in 2026 to 3.0% in May.
The central bank expects growth of 4.5% in 2027 and medium-term annual expansion close to Serbia’s estimated potential rate of around 3.5%. The MAT estimate for the first five months of 2026 is above the central bank’s full-year projection. The broader outlook remains dependent on energy prices, external demand and investment conditions.
Consumption-Led Growth Shapes Economic Structure
The current growth pattern supports tax revenue, banking activity and short-term corporate turnover through household spending and services. Longer-term growth performance remains linked to investment, manufacturing capacity, export expansion, infrastructure implementation and productivity improvements.
Retail and services remained the main contributors to GDP growth during the first five months of 2026. Export coverage improved, inflation remained above European averages, industrial output recorded limited growth and construction activity declined slightly.
