Serbia’s economic expansion is gaining momentum as public investment, household demand and electric-vehicle exports increasingly contribute to growth, while weaker demand across the European Union continues to weigh on parts of the manufacturing sector.
The World Bank forecasts Serbian GDP growth to rise from about 2% in 2025 to 3.1% in 2026 and 3.7% in 2027, before moderating to 3.5% in 2028. The bank identifies public investment, tourism, stronger household incomes, expanding credit and resilient exports among the main factors supporting the acceleration.
Manufacturing and EV exports add to growth
Industrial exports are becoming a more significant component of Serbia’s growth structure. Car production increased by nearly one-third in January-July, supported by the expansion of battery-electric vehicle output and higher exports to Italy. The development of EV production in Kragujevac is particularly important for the manufacturing sector, linking Serbian industrial output with the broader European shift toward electric vehicles. This creates an additional source of growth alongside large infrastructure programmes and Expo 2027, which continue to support economic activity through investment.
European demand remains a constraint
The stronger domestic investment cycle is taking place against a weaker external environment. The European Union remains Serbia’s dominant trading partner, while slower European growth, elevated energy costs and intensifying international competition are creating pressure across automotive supply chains.
As a result, Serbia’s economy is developing along two different tracks. Construction, infrastructure, credit and household consumption remain comparatively strong, while manufacturers dependent on sales into Western European markets are operating amid weaker demand. The government’s growth projections are more optimistic than those of the World Bank, meaning that a stronger performance during the later part of 2026 would be needed to close the difference between the forecasts.
Post-Expo investment cycle becomes a key factor
The role of manufacturing is becoming increasingly important as Serbia approaches the later stages of its current public-investment cycle. A key issue for the economy is how growth will develop after Expo-related capital expenditure reaches its peak. Continued expansion in EV production, higher-value manufacturing and services exports would provide additional sources of economic activity beyond the current investment cycle.
Without further expansion in those areas, economic growth could remain more heavily reliant on government investment and household consumption. The current acceleration therefore coincides with a changing composition of Serbia’s growth, with expanding industrial exports developing alongside infrastructure investment and domestic demand.
