Serbia’s economy entered 2026 with stronger-than-expected performance, according to first-quarter data from the Statistical Office. Household consumption, retail activity and service-sector expansion offset weakness in construction and parts of industry. The figures also point to domestic demand as the main driver of growth amid a more uncertain European economic environment.
Real GDP rose 3.2% year-on-year in the first quarter of 2026, up from 2.2% growth in the final quarter of 2025. On a seasonally adjusted basis, economic activity increased by 0.2% quarter-on-quarter. Growth momentum remained positive even as several investment-related sectors recorded slower activity.
Trade, retail and services contribute most to value added
The composition of growth shifted toward consumers, services and trade rather than construction activity or heavy industry. The largest contribution came from the combined segment covering wholesale trade, retail trade, transport, storage, accommodation and food services. In that category, gross value added increased by 4.9% year-on-year.
Domestic consumption trends were reflected across expenditure components. Household final consumption expenditure grew by 4.8%, while government consumption increased by 5.1%. Spending by non-profit institutions serving households expanded by 5.6%, supporting internal demand despite higher financing costs and slower growth across much of the European Union.
Retail activity also showed signs of continued strength during the quarter, with retail turnover posting double-digit nominal growth based on earlier monthly data. The GDP release linked these developments to a significant contribution from trade and consumer-oriented services.
Construction weakens while selected services expand
A key contrast in the first-quarter results was between services and investment-linked sectors. Construction remained among the weakest parts of the economy, with gross value added declining by 5.1% year-on-year. This followed a volatile 2025 period involving fluctuating infrastructure activity and changing project execution schedules.
The construction slowdown is notable because the sector has previously supported growth through large-scale infrastructure projects, residential development and foreign direct investment. The weakness suggests that some public and private investments were delayed or progressing more slowly than anticipated in the opening months of the year.
Industry delivered mixed signals as well, with the broad industrial category—including manufacturing, mining, energy supply and utilities—contracting by 0.7%. At the same time, higher-value service activities continued to expand, including information and communication at 3.5%, financial and insurance activities at 6.9%, and professional, scientific and technical services at 6.1%.
Agriculture rises; exports grow faster than imports
Agriculture provided one of the strongest positive contributions in the quarter after weather-related volatility in prior periods. Agricultural gross value added increased by 7.1% year-on-year. The recovery was described as contributing to regional economic activity and export potential while remaining dependent on climatic conditions for the rest of the year.
Exports continued to support growth externally, rising by 4.6%, while imports increased by 3.6%. With exports expanding faster than imports, foreign demand remained an additional pillar of economic activity despite weaker industrial production figures.
The export performance aligned with merchandise trade data showing improving external balances during early 2026. Serbia reported stronger export growth than import growth and a significantly narrower trade deficit compared with the same period of the previous year.
GDP components by sector and income approach
In nominal terms, Serbia generated RSD 2.56 trillion of GDP during the first quarter. Gross value added reached approximately RSD 2.19 trillion, while taxes less subsidies on products contributed an additional RSD 373.7 billion.
Sectors accounted for output differently across categories, with manufacturing and related industrial activities producing nearly RSD 473 billion. Public administration, education and healthcare activities generated approximately RSD 340 billion, while the broad trade and tourism segment produced nearly RSD 379 billion.
The data also show an economy increasingly linked to household spending, logistics, information technology, financial services and tourism-related activity alongside ongoing investment and construction importance.
The key question for later in 2026 is whether construction and industrial activity can regain momentum after their weaker first-quarter performance. A broader recovery would support a more balanced growth profile as domestic-demand-led expansion continues to feature prominently in early results.
The first quarter therefore ended with a reported 3.2% expansion rate for Serbia’s economy entering 2026 on firmer footing than many expected based on available data.
