Serbia recorded a substantial decline in foreign direct investment during the first four months of 2026, while income outflows from foreign-owned companies rose, led by a sharp increase in dividend payments. Foreign direct investment inflows totalled €600 million between January and April, down by more than 40% from €1.07 billion in the corresponding period of 2025.
Investment abroad by Serbian residents also contracted, falling from €870 million in the first four months of last year to about €240 million in 2026. Serbia nevertheless maintained a positive net FDI balance of nearly €360 million over the period. The data indicate a slowdown in new foreign capital entering the country, alongside a growing share of profits generated by foreign-owned companies being transferred outside Serbia.
Foreign-Owned Companies Increase Profit Transfers
Outflows from direct-investment income reached €1.35 billion from January through April, representing an annual increase of 12%. Dividend payments accounted for almost €800 million, rising by nearly 60% compared with the same period a year earlier. Approximately one-third of total direct-investment income outflows was linked to reinvested earnings, while interest payments represented around €130 million.
The rise in dividends coincided with weaker FDI inflows, indicating that foreign investors continued to generate profits in Serbia while allocating a larger portion of those profits to parent companies rather than retaining them for local expansion. Serbia’s economy has relied extensively on foreign investment over the past decade, particularly in manufacturing, mining, automotive components, electronics, logistics and export-oriented services. Foreign-owned projects have supported employment, industrial output, exports and modernization across several sectors.
Investment Conditions Face Growing Pressure
Economists cited by Kvartalni monitor identified rising operating costs, subdued economic growth in the European Union and political instability as factors affecting investment decisions. They also noted that FDI may not return to the levels achieved during the previous decade, while domestic private-sector investment has yet to compensate for lower foreign capital inflows.
The slowdown has increased attention on Serbia’s dependence on externally sourced investment for industrial development. Continued weakness in foreign investment, combined with limited domestic capital formation, could reduce the contribution of investment to productivity growth, export expansion and technological upgrading.
Raiffeisen analysts said that weaker FDI performance had so far been partly offset by household consumption, supported by employment levels, remittances and real wage growth. Consumption does not provide the same contribution to production capacity, logistics development, technology transfer or export-oriented activity as investment.
European Investors Retain Leading Position
European investors remained the main source of foreign investment in Serbia during the first quarter of 2026, contributing €565 million. Investors from European Union member states accounted for €425 million of that amount.
The Netherlands was identified as the largest EU source of investment, with nearly €230 million attributed to Dutch investors. The Czech Republic invested €53 million, followed by Slovenia with €46 million, France with €34 million and Malta with €30 million. Investors from the United Kingdom contributed €113 million, while investment from the United States totalled €25 million.
Chinese Investment Records Net Outflow
China registered a net investment outflow of €234 million from Serbia during the January-April period. The result followed a modest Chinese investment outflow recorded in 2025 and marked a significant change from earlier years, when Chinese companies were among the country’s largest foreign investors.
Chinese investment in Serbia reached €1.7 billion in 2024 and €1.4 billion in 2023. Annual Chinese investment had also exceeded €1 billion in each of the two preceding years.
The latest data show a changing structure in the relationship between foreign investors and Serbia-based operations. While higher dividend payments can follow profitable periods and corporate cash-management decisions, continued profit repatriation combined with lower inflows reduces the amount of capital available for reinvestment in local production capacity.
Industrial Policy Plan Targets Domestic Capital
The Serbian government has introduced an action plan for the implementation of its industrial policy strategy for 2026-2027, with increased attention on investment incentives and domestic investment activation. The plan earmarks more than 23 billion dinars for investment support in 2026 and 24.5 billion dinars in 2027.
The policy framework is intended to support investment that contributes to productivity, domestic supplier development, higher-value production and export capacity. Serbia’s industrial priorities include stronger local sourcing, engineering capabilities, automation, energy efficiency, research cooperation and export contracts.
Foreign-owned assembly operations and import-dependent projects have contributed to employment and industrial activity, while the next phase of industrial development will depend on the extent to which investment generates local value creation and links Serbian companies to wider supply chains.
Investor Retention Becomes a Larger Policy Focus
Serbia retains several factors supporting its investment position, including an established industrial base, regional logistics connections, a competitive labour pool, access to EU markets and existing foreign manufacturing clusters. The decline in new FDI and the rise in dividend payments have increased the importance of retaining existing investors and encouraging reinvestment. Corporate decisions are being influenced by operating costs, political conditions, EU demand, energy prices, regulatory transparency and long-term industrial policy.
The first four months of 2026 point to a more selective investment environment in which foreign capital remains important but may be more sensitive to cost inflation, political risk, domestic demand and competitiveness within European supply chains. As a greater share of foreign-owned profits is distributed rather than reinvested, domestic capital, bank financing and industrial policy implementation will become increasingly relevant to Serbia’s future investment and growth framework.
