Serbia’s real GDP growth reached approximately 2.0 percent in the first eleven months of 2025, according to macroeconomic estimates. This modest expansion reflects resilience in the face of a challenging external environment, although it also underscores ongoing structural limitations that restrict potential output.
Household consumption emerged as the primary driver of this growth. Factors such as rising wages, stable employment, and moderate inflation bolstered spending, particularly in the services sector. Notable gains were observed in retail trade, telecommunications, and transport services, which helped to mitigate weaker performance in certain manufacturing areas. Public investment also made a positive contribution, though execution delays hindered its full impact.
In contrast, industrial output did not meet expectations. Disruptions related to energy supply, particularly at NIS, negatively affected processing industries. Additionally, export-oriented manufacturing faced challenges from wage inflation and declining demand in key European Union markets. Consequently, industrial value added increased at a slower pace than services, reflecting a significant shift in the composition of Serbia’s economic growth.
Investment trends presented a mixed picture. While foreign direct investment inflows persisted, they became increasingly focused on services and real estate rather than high-value manufacturing sectors. Greenfield industrial investments experienced a slowdown due to rising labor costs and tighter global financing conditions. Despite a modest increase in gross fixed capital formation, it was insufficient to substantially enhance potential growth.
From a macroeconomic stability viewpoint, this growth was achieved without significant imbalances. Inflation rates decreased, the current account remained manageable, and public debt stabilized at moderate levels. However, the nature of this growth raises concerns regarding its sustainability. An expansion driven by consumption offers limited productivity improvements.
Looking ahead, the medium-term challenge for Serbia is to elevate its growth ceiling. Productivity gains are hampered by underinvestment in technology, infrastructure, and workforce skills. Without a more robust industrial base and enhanced export capabilities, GDP growth is expected to remain in the range of 2–3 percent—below what is necessary for rapid income convergence with the European Union.
