Serbia’s economy grew 3.6% year on year in the second quarter of 2026, according to the flash estimate released on 31 July, marking an improvement from the 3.2% growth recorded in the first quarter.
The stronger quarterly performance brings Serbia closer to the government’s 3% full-year growth target, although the second half of the year remains dependent on the impact of drought conditions, energy imports and election-related uncertainty.
Domestic consumption drives economic expansion
The latest figures indicate that economic growth is being supported primarily by domestic demand rather than broad-based industrial expansion. Retail activity continued to strengthen, with turnover in June increasing 6.6% in nominal terms and 4.3% in real terms. Over the first half of 2026, real retail growth reached 7%, significantly exceeding the pace of industrial output growth.
Household spending has been supported by rising wages. The average net salary in May reached RSD118,398, while real wage growth during the January–May period stood at 8.2%. The median salary was considerably lower at RSD93,277, highlighting differences between average earnings and the purchasing power of a larger share of consumers.
Industrial employment declines despite GDP growth
While overall economic output expanded, industrial indicators remained weaker. Industrial production increased by only 0.8% in June, pointing to limited momentum in manufacturing and related sectors. Registered employment declined by 14,163 people year on year during the second quarter, falling to 2.356 million workers. The largest reduction was recorded in manufacturing, which lost 17,422 jobs.
Additional employment declines were reported in wholesale and retail trade, where headcount decreased by 4,276, while the mining sector recorded a reduction of 1,134 jobs. The combination of higher GDP and lower industrial employment suggests that growth has been concentrated in areas such as consumption, services and more capital-intensive export activities. The figures may also reflect corporate restructuring, with some manufacturers increasing output efficiency while weaker suppliers and labour-intensive businesses reduce staffing levels.
Growth balance creates pressure on imports and inflation risks
The current economic structure indicates that domestic demand is expanding faster than the industrial base. Stronger consumption could continue supporting retail, banking and service-sector revenues, while also increasing reliance on imports. A widening gap between domestic demand and supply capacity could increase exposure to external pressures, particularly through energy and food price fluctuations. The second half of the year will therefore remain important for determining whether current growth momentum can be sustained.
