Serbia’s economy expanded by 3.8% year on year in the second quarter of 2026, accelerating from growth of 2.1% in 2025, while the infrastructure programme linked to the international Expo is expected to support a further increase in economic activity.
The National Bank of Serbia (NBS) maintains its forecast of 3.2% GDP growth for 2026, although it says risks have shifted to the upside following stronger-than-expected industrial output and agricultural performance. Its projection for 2027 stands at 4.5%, supported by Expo-related investment and infrastructure construction.
The central bank estimates that Serbia’s medium-term growth potential, after temporary factors subside, is approximately 3.5% annually. The difference between the projected expansion in the Expo year and the underlying growth rate raises questions about the economy’s ability to sustain momentum once the investment cycle ends.
Domestic demand is expected to remain the principal driver, with consumption and fixed investment both contributing to expansion. Private consumption is forecast to increase by 4.3% in 2026 and 4.5% in 2027, while fixed investment is projected to rise by 3.5% and 4.2%, respectively.
Infrastructure expenditure could strengthen transport links, urban capacity and the productive base. Its longer-term economic contribution will depend on whether completed projects reduce operating costs and improve conditions for businesses beyond the Expo period.
Public Investment and Fiscal Considerations
With public debt at around the mid-40% range of GDP, Serbia has room to finance investment. However, a temporary construction and services boom could increase domestic demand, wages and imports faster than productive capacity.
Such a pattern could make the projected 2027 growth rate stronger than the economy’s underlying performance, while leaving businesses with higher operating costs after the event. The key issue is therefore how effectively public investment is allocated and whether infrastructure projects generate lasting improvements in economic efficiency.
Exports and Investment Beyond Expo
Serbia’s export performance has remained resilient despite weak demand in the European Union and neighbouring markets. Goods exports increased strongly during the first eight months of 2026, while services exports continued to expand.
The performance indicates that investments made in previous years are beginning to generate output for international markets. The Expo investment cycle could reinforce this trend if spending on transport infrastructure, digital networks and business services improves the capacity of domestic companies to export.
The NBS figures point to a stronger near-term growth outlook, with the central forecast reaching 4.5% in 2027 before the economy moves closer to its estimated medium-term potential of 3.5%. Serbia’s subsequent performance will depend on whether investment translates into sustained growth in exports, productivity and business activity beyond the Expo cycle.
