Serbia’s external imbalance narrowed in the first seven months of 2026, with faster growth in exports than imports helping reduce the country’s current-account deficit to €1.9 billion. The deficit was €252 million lower than a year earlier. Exports of goods and services rose 7.8% year on year, while imports increased 5.7%. The shift has reduced pressure from Serbia’s structural trade deficit, which has been associated with investment-related imports, energy purchases and strong domestic consumption.
Trade deficit declines relative to GDP
The trade deficit fell to 3.1% of GDP in the first half of 2026, compared with an average of 4.7% from 2023 to 2025. The National Bank of Serbia (NBS) subsequently lowered its estimate for the full-year current-account deficit to 4.1% of GDP, from an earlier projection of 5.9%. The central bank expects the deficit to narrow further to about 3% of GDP in 2027, when the Expo exhibition is expected to support tourism, business services and other services exports.
Income flows offset part of the improvement
Developments across individual current-account components were mixed. A stronger secondary-income surplus improved the current account by approximately €441 million. At the same time, the primary-income deficit widened by around €621 million, partly due to higher dividend payments.
The increase in dividend outflows reflects Serbia’s substantial foreign-investment base. Foreign-owned companies contribute to production and exports, while profitable businesses can also generate larger payments to overseas shareholders. This makes the external balance increasingly dependent on whether new foreign investment expands export capacity and generates sufficient retained earnings to offset profit repatriation.
Investment cycle keeps import demand elevated
The narrower external deficit reduces Serbia’s immediate reliance on continued capital inflows to finance international transactions. The economy remains in a significant infrastructure and investment cycle. Imports of equipment, intermediate goods and construction inputs may therefore remain elevated. The improvement in the external balance is strongest where it is supported by expanding export capacity rather than by temporarily weaker import demand. Continued growth in manufacturing and services exports at a faster pace than imports would leave Serbia with a substantially smaller external imbalance after the Expo period than during the first half of the decade.
