Serbia’s industrial sector is showing a widening gap between rapidly expanding capital-goods industries and declining traditional manufacturing branches, with vehicles, electrical equipment and machinery recording strong gains while metals, textiles and consumer goods contract. Total industrial output fell 2.3% year on year in July, while manufacturing declined 1.6%. In contrast, capital-goods production increased 8.8% during the month. For January-July, capital-goods output was 10.9% higher than a year earlier, compared with growth of only 0.3% for total industry.
Automotive production leads industrial expansion
The automotive sector recorded some of the strongest gains. Production of motor vehicles, trailers and semi-trailers increased 29.6% year on year in July and was 44.3% higher in January-July. Motor-vehicle production itself has expanded more rapidly than the wider component-supply chain, showing the effect that increased final-assembly capacity can have on national industrial output even when parts production is weaker. Electrical equipment also recorded sustained growth. Output rose 10.7% in July and 11.3% during the first seven months. Production of transformers, generators and electricity-distribution equipment was particularly strong, while battery and accumulator manufacturing also recorded rapid growth from a smaller base.
Machinery and chemicals maintain growth
Machinery production increased 13.6% in July and 9.9% over January-July. Chemical production rose 5.3% in July and 6.8% year to date. The expansion in these industries reflects demand associated with investment, export manufacturing, infrastructure spending and the continuing electrification of industrial activity. Their performance contrasts sharply with several traditional manufacturing segments.
Metals, textiles and consumer goods contract
Basic-metals production fell 16.6% year on year in July and 12.5% during January-July. Textile production declined 12.2% in July, while clothing output dropped 12.9%. Fabricated metal products also recorded substantial declines from the previous year. Pharmaceutical production fell almost 20% in July, although monthly movements in the sector can be volatile. Durable consumer-goods production decreased 7.9% in July and 12.6% during the first seven months. The weaker industries include labour-intensive businesses and sectors exposed to energy, wage and raw-material costs.
Industrial structure shifts toward higher-value sectors
The strongest-performing branches generally have greater capital intensity, closer integration into European production chains and stronger exposure to foreign investment. This is contributing to a gradual change in Serbia’s industrial structure, with overall manufacturing increasingly dependent on a narrower group of high-output activities.
These include automotive assembly, electrical equipment, machinery, chemicals, mining and selected construction-material industries. The concentration has supported export performance. Serbia’s goods exports increased 8.8% in euro terms during January-July, significantly faster than imports. A more concentrated industrial base also leaves national production figures more exposed to developments at individual large manufacturing facilities, European vehicle demand and the timing of major export-oriented projects.
Wage and cost pressures affect traditional manufacturing
Traditional manufacturers are also facing higher labour costs. Real wages increased 8.4% during January-June, while labour availability remains tight. Businesses operating on lower margins and with limited pricing power face higher wages alongside rising producer costs and fragile European demand.
As a result, industrial performance is becoming increasingly uneven, with vehicles, electrical equipment, machinery, mining and construction-related materials positioned among the stronger segments, while metals, labour-intensive manufacturing and several consumer-oriented industries remain under pressure. The result is an industrial sector in which the headline index can remain close to stagnation even as some of Serbia’s largest new manufacturing investments record double-digit production growth.
