Serbia’s expanding stock of foreign investment is creating a larger flow of dividend payments to overseas shareholders as foreign-owned companies mature and generate profits. The primary-income deficit widened by about €621 million year on year in January-July 2026, with higher dividend expenditure contributing to the deterioration. This was partly offset by a €441 million improvement in the secondary-income surplus.
Foreign Investment Enters a More Mature Phase
Serbia attracted €24.4 billion in foreign direct investment between 2020 and 2025, with almost 60% directed to tradable sectors and around €6.3 billion invested in manufacturing. FDI inflows continued in 2026, reaching €1.5 billion during the first seven months, while net inflows stood at approximately €1 billion.
The impact of foreign investment on Serbia’s external accounts develops over several stages. Initial capital inflows provide financing, while new factories and companies can increase exports, replace imports and support employment. As foreign-owned businesses become profitable, however, overseas shareholders can receive dividends, generating an income outflow from Serbia.
Export Growth Supports the External Position
Dividend payments represent returns to foreign capital as investments become profitable, while their growing scale changes the composition of Serbia’s external accounts. As the stock of foreign-owned businesses expands, exports and new investment inflows become increasingly important for covering not only imports but also the income payments generated by established foreign-owned companies.
Serbia’s export performance has strengthened alongside the rise in dividend outflows. Exports of goods and services increased 7.8% year on year in January-July, compared with 5.7% growth in imports, helping reduce the current-account deficit to €1.9 billion. The trade deficit declined to 3.1% of GDP in the first half, compared with an average of 4.7% during 2023-2025.
Reinvestment Becomes More Relevant
The development of Serbia’s foreign investment base also puts greater importance on how companies use their earnings. Reinvested profits retained by foreign-owned companies can reduce immediate dividend outflows while providing financing for additional productive capacity in Serbia.
The composition of future FDI therefore matters alongside the overall volume of capital entering the country. Investments generating export revenues, developing local supply chains and supporting repeated reinvestment have different effects on external accounts from projects that rely heavily on imports and distribute most earnings to foreign shareholders after reaching maturity. Serbia’s investment model is consequently moving beyond the initial attraction of foreign capital, with the accumulated investment base increasingly linked to the country’s export performance, productive capacity and cross-border income flows.
