Serbia has incorporated an increasing number of European business requirements while formal EU accession negotiations remain largely stalled. The country has opened 22 of 35 negotiating chapters and provisionally closed two, with no new negotiating cluster opened since December 2021. Cluster 3, covering competitiveness and inclusive growth, is considered technically ready for opening, but further progress has been linked by EU governments to substantial advances in the rule of law and normalisation with Kosovo.
For Serbian companies, however, European integration continues through trade, finance and supply chains. The EU accounted for 58.3 per cent of Serbia’s trade in 2024, while European customers increasingly require Serbian suppliers to comply with rules covering carbon emissions, supply chains, cybersecurity and corporate reporting.
European financing and supply chains continue to shape the market
The EU’s Growth Plan links access to additional financing to the implementation of reforms, giving companies and institutions a financial incentive to continue aligning with European requirements despite the slower political accession process. Serbia’s investment base is also divided among several external sources. EU investors accounted for 37.6 per cent of foreign direct investment inflows in 2024, while China represented about one-third of FDI and roughly 10 per cent of Serbia’s trade.
This combination has brought industrial capital and production capacity, while also creating different requirements concerning procurement, subsidies, environmental reporting and geopolitical alignment.
Stellantis’s Kragujevac plant illustrates the European industrial model, with a legacy manufacturing facility repositioned for electric-vehicle production and incorporated into a continental supply chain. Bosch, Continental, Michelin and Brose have contributed to Serbia’s automotive and components manufacturing base.
Chinese investment has a significant industrial presence through Zijin’s copper and gold operations and HBIS’s steelworks in Smederevo. Domestic companies and state-owned enterprises continue to control strategically important networks, distribution systems and infrastructure.
Labour costs are changing the foreign-investment model
The International Monetary Fund has assessed Serbia’s labour-intensive foreign-investment strategy as exhausted, citing labour shortages, rising wages and the need for productivity to become a greater source of competitiveness. Net foreign direct investment declined to about €3.5bn in 2025, following a record level in 2024. The changing investment environment increases the importance of projects involving engineering, software, automation, research and supplier development rather than additional assembly capacity based primarily on lower labour costs.
For investors, Serbia combines access to European production networks with a degree of institutional uncertainty arising from its unfinished accession process. The resulting environment has supported investment while increasing the importance of political access, guarantees and rapid investment returns.
Company-law reforms remain incomplete
The European Commission reported no progress on company law in its 2025 assessment. Outstanding reforms include a new takeover law, expanded digital tools for corporate operations and EU-compatible procedures covering cross-border conversions, mergers and divisions. Serbia also needs further alignment on sustainability reporting and public country-by-country tax disclosure. The Business Registers Agency is technically prepared to connect to the EU’s company-register interconnection system, but the associated legal and institutional framework remains incomplete.
European-owned corporations can partly manage these differences through group-level systems. Parent companies already require consolidated auditing, reporting and compliance procedures, allowing subsidiaries in Serbia to operate under standards that may exceed domestic requirements. For Serbian mid-sized companies seeking international financing, acquisitions or listings, the divergence can create additional administrative requirements. Businesses may need to satisfy demanding European counterparties while simultaneously operating under domestic rules and enforcement practices that have not fully converged with EU standards.
Rule-of-law concerns affect commercial predictability
The European Commission’s 2026 assessment identified deterioration in public consultation during 2025 and referred to decrees adopted in March 2026 that exempt certain EU-integration measures from mandatory impact assessments. Amendments to the judiciary adopted in January also raised concerns about safeguards, although subsequent revisions addressed many of those issues. The developments have implications for companies because formal regulatory alignment does not necessarily eliminate uncertainty over how rules are developed and implemented.
Established companies retain an operating advantage
Companies already active across Serbian and European systems are positioned to manage the regulatory transition through existing compliance structures and local relationships. Banks, telecommunications companies, manufacturers and professional-services firms have experience with EU requirements while maintaining domestic networks. State-backed and politically connected businesses can also retain advantages in obtaining permits, public contracts and access to infrastructure. The competitive significance of those advantages depends on the consistency with which competition, procurement and state-aid rules are applied.
For new investors, opportunities are emerging in areas directly connected to regulatory and industrial changes. Automation suppliers can address labour shortages in manufacturing, while renewable-energy developers and grid specialists can serve industrial companies exposed to EU carbon requirements. Payments and compliance companies can benefit from changes in financial regulation, while advisers, auditors and data providers will be required as sustainability and beneficial-ownership disclosure requirements expand.
Economic growth remains moderate
The IMF estimated that Serbia’s economy grew by 2 per cent in 2025 and forecasts 2.8 per cent growth in 2026, followed by a possible increase in 2027 associated with Expo-related activity. Serbia remains connected to European industrial and trade networks and is a significant economy within the Western Balkans. At the same time, the combination of regulatory uncertainty, rising labour costs and unfinished institutional reforms affects the investment environment. For companies operating in Serbia, the practical significance of EU convergence increasingly lies in the implementation of rules governing public procurement, permits, commercial disputes and subsidies, alongside the formal progress of accession negotiations.
