Serbia’s industrial performance is increasingly being shaped by a widening gap between manufacturing growth and declining electricity production, with factory output providing support to the economy while the energy sector remains a significant drag.
Overall industrial production was approximately 0.8% higher year on year in June, based on the National Bank of Serbia (NBS) series derived from official statistical data. The improvement was driven primarily by manufacturing. Manufacturing output increased around 2.8% compared with June 2025, while mining declined about 1%. The sharpest deterioration came from electricity, gas and steam production, which fell by more than 10% year on year.
Manufacturing supports exports and economic activity
The strength of manufacturing remains important for Serbia because the sector connects foreign investment with exports, employment and productivity gains. Continued expansion in factory production consequently provides support for both overall economic growth and external trade.
The performance of the energy sector presents a contrasting picture. Weak domestic electricity generation can affect industrial competitiveness even when available supply is sufficient to meet immediate consumption. Lower domestic output can increase reliance on electricity imports, expose industrial users to regional wholesale-market prices and limit the ability of the power system to accommodate additional industrial demand at lower cost.
Energy requirements rise with industrial investment
The issue is becoming more relevant as Serbia seeks to attract capital-intensive manufacturing investment while electricity demand is also being influenced by the electrification of transport, heating and industrial processes. Electricity markets across South-Eastern Europe are simultaneously facing greater volatility linked to rising renewable generation, transmission constraints and fluctuations in weather-dependent hydropower production.
Against this backdrop, mining represents a less dynamic part of Serbia’s industrial performance. Mining output was slightly below its June 2025 level, despite the country’s substantial operations involving copper, gold and other minerals.
Industrial and energy policy increasingly connected
The June figures leave policymakers with a mixed industrial picture. Serbia’s factories are expanding sufficiently to provide a positive contribution to economic activity, while domestic electricity generation is moving in the opposite direction. The divergence can persist for a period without immediately limiting industrial production. Greater pressure could emerge if manufacturing investment grows faster than electricity generation, transmission networks and system-flexibility assets.
This increasingly links Serbia’s industrial strategy with its energy policy. Manufacturing expansion requires not only production capacity and investment, but also reliable access to competitively priced electricity. For companies competing in the European market, power availability, electricity costs and carbon intensity are becoming increasingly important factors in determining the competitiveness of Serbian manufacturing.
