Serbia’s updated Fiscal Strategy for 2026 to 2028 outlines a growth framework that emphasizes public investment, with a strong initial focus on construction, a peak in services anticipated for 2027, and a gradual recovery in industrial output expected to extend into 2028. The strategy highlights a sequence where capital expenditures stimulate domestic demand first, followed by service sector expansion during the EXPO cycle, before industrial activity normalizes as external conditions improve and supply chains stabilize.
The government forecasts a real GDP growth rate of 3.0% for 2026, increasing to 5.0% in 2027, and then moderating to 3.5% in 2028. This growth trajectory is bolstered by significant capital formation, with gross fixed investment projected to rise by 6.9% in 2026, 5.9% in 2027, and 4.5% in 2028. Exports are also expected to increase during this period, at rates of 4.7%, 8.4%, and 5.6%, respectively; however, the early stages will be marked by a negative net export contribution of -1.6 percentage points in 2026 due to high import levels.
Fiscal discipline is maintained within established parameters, with the general government deficit set at 3.0% of GDP for both 2026 and 2027, narrowing to 2.5% in 2028. Public debt is projected to decrease slightly from 44.5% of GDP in 2026 to 44.1% by the end of the strategy period. Nevertheless, the composition of expenditures indicates a more expansionary approach in real terms, with consolidated capital expenditure expected to reach RSD 737.4 billion in 2026 and rise further to RSD 784.1 billion by 2028.
A notable aspect of this fiscal strategy is the emphasis on sectoral growth projections. Construction is anticipated to grow by an impressive 8.5% in 2026, driven primarily by state-led projects such as EXPO Belgrade 2027, which alone is projected to account for RSD 42.6 billion that year, alongside other major infrastructure initiatives like the National Football Stadium and the Belgrade Metro system.
In contrast, the services sector is forecasted to expand by 5.9% in 2027, reflecting the economic impact of EXPO and its spillover effects on tourism and logistics services. This shift towards services is crucial as it is expected to counterbalance an earlier deterioration in the current account balance, which widens to 6.0% of GDP in 2026 before narrowing to 4.9% in the following year.
Industrial growth is projected at just 0.4% in 2026 but is expected to recover to rates of 3.9% and then 4.7% in subsequent years as external conditions improve. This delayed recovery is influenced by weaker demand from key export markets and ongoing volatility in energy prices.
The strategy also acknowledges potential impacts from climate-related trade measures such as the EU’s Carbon Border Adjustment Mechanism (CBAM), which may impose rising compliance costs on carbon-intensive industries like metals and cement production. A legislative response through a Law on the Taxation of Carbon-Intensive Imported Products is being prepared, indicating alignment with EU carbon pricing frameworks.
Agriculture’s role appears stabilizing rather than growth-oriented, with projections indicating a modest increase of 3.1% in output for 2026 followed by stagnation through the following two years.
Public investment focuses heavily on transport and urban infrastructure projects including substantial funding for key initiatives like the Belgrade Metro Line and various road and rail upgrades, which are critical for immediate construction activity and subsequent economic benefits through increased mobility and urban consumption.
Energy remains a pivotal factor within this framework as Serbia continues its transition towards renewable energy generation while grappling with demands on grid infrastructure due to increased electrification and carbon pricing pressures.
Foreign direct investment (FDI) is anticipated to average around 4.5% of GDP annually during this period, providing essential financing for the current account deficit while shifting towards sectors that align more closely with EU regulatory standards.
Overall, Serbia’s Fiscal Strategy presents a structured growth model spanning three stages: an initial investment surge led by construction activities in 2026, followed by peak services activity driven by EXPO-related demand in 2027, culminating with a more balanced industrial recovery into 2028 under evolving external pressures and regulatory frameworks.
