Serbia’s Growth Continues as State-Linked Financial Risks Draw Market Focus

Serbia entered calendar week 27, covering 29 June to 5 July 2026, with economic growth, consumer spending, infrastructure activity and export-oriented industries continuing to support the market outlook. At the same time, developments involving NIS, EPS, Srbijagas and Telekom Srbija placed greater attention on state-linked balance sheets, receivables, leverage and strategic corporate ownership.

First-quarter gross domestic product growth was confirmed at 3.2% year on year, although the seasonally adjusted quarterly increase was 0.2%. May industrial production rose 0.3% year on year, while retail trade increased 9.6% in current prices and 6.2% in constant prices. Serbia’s external trade reached €32.38 billion in the January-May period, an increase of 3.9%. The euro-denominated trade deficit narrowed by 22.9% to €2.98 billion.

NIS Ownership Talks Continue Under Sanctions Waiver

The United States Office of Foreign Assets Control extended its waiver for NIS until 31 July 2026, allowing the company to continue importing crude oil while negotiations continue over the proposed sale of the Russian-owned majority stake to Hungary’s MOL. NIS operates the Pančevo refinery, Serbia’s only oil refinery. Gazprom Neft and Gazprom hold the majority shareholding targeted by US sanctions.

Under the proposed ownership structure, MOL would acquire the Russian stake, while Serbia would seek an additional 5% shareholding. Refinery production would be maintained at approximately 4.8 million tonnes per year. The transaction involves refinery supply continuity, sanctions exposure, state participation and the position of Hungary in regional downstream energy markets. The outcome also affects fuel logistics and industrial operations linked to Petrohemija.

Energy Receivables Remain Concentrated in Public and Industrial Customers

Outstanding electricity and gas debts owed to EPS and Srbijagas exceeded RSD 143 billion during the week. Srbijagas receivables were reported at more than RSD 123 billion, while EPS electricity receivables were close to RSD 20 billion.

The largest reported gas debtor was Novi Sad-Gas, with RSD 29.3 billion in obligations. HIP Azotara, which is in bankruptcy, owed RSD 23 billion, while Beogradske elektrane had liabilities exceeding RSD 14 billion. EPS recorded approximately RSD 460 billion in operating revenue in 2025, supported in part by electricity price increases. Srbijagas has also improved profitability despite the level of debt and unpaid receivables.

The receivables position includes municipalities, district-heating companies, bankrupt industrial assets and public-sector customers. The cash-collection performance of the two companies remains a central issue alongside their reported revenue and profit figures.

Telekom Srbija Reports Higher Earnings and Debt

Newly published standalone results for Telekom Srbija showed net profit rising to RSD 24.78 billion in 2025 from RSD 10.08 billion in 2024. Operating revenue increased to RSD 195.38 billion from RSD 155.31 billion. Total financial obligations rose to RSD 658.93 billion from RSD 431.20 billion. The figures combine higher earnings with a substantial increase in financial leverage.

Telekom Srbija reported group revenue of €2.3 billion and adjusted EBITDA of €1.3 billion, figures that supported a credit-rating upgrade narrative earlier in 2026. The latest disclosure also focused attention on refinancing costs, media-content obligations and the company’s role in regional consolidation.

Belgrade Metro Moves Into Systems Integration Phase

Serbia selected Spain’s Ingerop T3 as master integrator for Belgrade Metro Line 1. The company will oversee system design, contractor coordination, integration, testing, commissioning and certification preparation. The appointment follows the earlier €915 million turnkey contract awarded to Alstom for trains and systems. The broader construction package also involves Chinese contractors.

The project is entering a phase involving systems integration, commissioning procedures, certification work, technical-risk reporting, claims management and project-control requirements. The development is relevant for engineering, construction, advisory firms, banks and export credit agencies involved in large infrastructure projects.

Battery Materials Facility Secures PowerCo Supply Role

OCSiAl’s facility in Stara Pazova was selected to supply single-wall carbon nanotubes to PowerCo, Volkswagen’s battery subsidiary, for its Unified Cell platform.

The Serbian site was opened in 2024 and was initially designed to produce 60 tonnes of graphene nanotubes annually. OCSiAl has since discussed expanding capacity at the facility.

The plant is positioned as a European supply base for battery additives. The arrangement links Serbia to materials production and battery chemistry supply chains serving the European automotive industry.

KfW Programme Expands Biomass Heating Investment

Serbia launched the second phase of a KfW-backed biomass heating programme valued at €31.9 million. The programme will run until 2029 and includes the construction and reconstruction of district-heating systems in Prijepolje, Novi Pazar, Knjaževac and other cities.

The programme covers municipal heating, district-energy infrastructure and environmental compliance projects. Related work includes feasibility studies, environmental permitting, heat-demand modelling, biomass supply chains, boiler-house conversion, emissions monitoring and procurement procedures aligned with EU and KfW requirements.

Digital Financial Contracts Outpace Subscriber Growth

Serbia recorded 139,244 remotely concluded financial-service contracts in the first quarter of 2026, an increase of 49% year on year. Instant payments rose 31% year on year to 31.9 million transactions during the same period.

Mobile phone subscribers declined to 7.89 million at the end of March from 7.92 million at the end of 2025. Data traffic and digital-service usage remained significant across the telecom market. The figures show growing activity in remote financial contracting, payments, digital platforms, bundled services, content, business connectivity and financial-service ecosystems.

Agriculture and Food Exports Record Higher Volumes and Values

Serbia expects wheat production of 3.845 million tonnes in 2026, up 4.5% year on year. The estimate is 28% above the average recorded between 2016 and 2025. Fruit exports reached 287,056 tonnes valued at €807.9 million in 2025. During the first four months of 2026, fruit exports totalled €268 million, up 13% year on year.

Wheat, raspberries and sour cherries remain important for rural income, food-processing exports and cold-chain activity. The sector continues to face labour requirements, fragmented production, export-price exposure and investment needs in storage, irrigation, traceability and higher-value processing.

Tourism and Japanese Investment Framework Add to Services and Capital Flows

Serbia registered 470,000 tourist arrivals in May 2026, an increase of 7.4% year on year. Total overnight stays rose 5.5%, while foreign tourist overnight stays increased 9.3%. The tourism figures affect foreign-exchange earnings, hospitality employment, retail activity and regional air connectivity.

The Serbia-Japan investment protection agreement will enter into force on 30 July 2026 after Japan completed its internal procedures. The agreement establishes a legal framework for the protection and promotion of bilateral investment and applies to both existing and future investments. The agreement adds a formal investment framework for Japanese participation in industrial, infrastructure, equipment, energy-efficiency and technology-related projects in Serbia.