Serbia’s first quarter of 2026 showed a GDP expansion of around 3.0% year-on-year, placing the country among stronger performers in Europe. The overall picture was stable at headline level, while underlying components pointed to uneven momentum. Services, trade, net taxes and household demand supported growth, whereas industry and construction weighed on activity.
- GDP growth supported by services and household demand
- Industrial output down year-on-year despite March rebound
- Retail strength and wage growth underpin consumption
- Wages rise while labour-intensive sectors face cost pressure
- Trade improves as exports rise faster than imports
- Dependence on domestic demand and fiscal support; investment needs industrial traction
GDP growth supported by services and household demand
The pattern described for Serbia’s economic cycle is reflected in the split between demand-led activity and weaker production. Inflation remained below 3%, while wages continued to rise in real terms. Retail turnover stayed strong, banks continued lending, and the state retained room to support public investment. At the same time, the productive side of the economy moved less smoothly.
Industrial output down year-on-year despite March rebound
Industrial production was still 0.8% lower year-on-year in the first quarter despite a stronger March reading. Manufacturing fell 0.4%, mining declined by 3.2%, and electricity, gas, steam and air-conditioning supply decreased by 0.9%. March brought relief with total industrial output up 6.4% year-on-year and manufacturing rising 8.4%.
The March rebound improved the trend-cycle reading, indicating that Serbia’s industrial base can respond when operating constraints ease. However, part of the improvement was linked to temporary normalisation in sectors associated with the Pančevo refinery. This dependence made it harder to treat the March increase as a broad signal of industrial momentum .
Retail strength and wage growth underpin consumption
The domestic demand side showed firmer indicators through retail turnover data. In March, retail turnover rose by 15.5% nominally and 14.0% in real terms. The increase was supported by stronger wages, consumer confidence, credit activity and a favourable base effect tied to last year’s political and retail-market disruptions.
The retail expansion covered multiple categories, with real growth of 9.8% for food, beverages and tobacco, 12.9% for non-food products and 27.7% for motor fuels. For the first quarter overall, retail remained positive across all major categories .
Wages rise while labour-intensive sectors face cost pressure
Wage dynamics were central to household resilience during the period described. Average net earnings in February reached 116,127 dinars, up 12.2% nominally and 9.5% in real terms versus a year earlier. This supported household purchasing power even as companies faced higher labour costs.
The same wage trend also increased pressure on margins in labour-intensive areas including construction, logistics, hospitality and services . The source data links these pressures directly to rising labour costs rather than changes in other cost components.
Trade improves as exports rise faster than imports
The trade figures also align with a two-speed interpretation of Serbia’s economy. Goods exports increased by 7.1% in the first quarter to €8.713bn, while imports rose only 0.3% to €10.314bn. The goods deficit narrowed by 25.4% to €1.601bn, and export-import coverage improved to 84.5%.
The narrowing of the deficit may partly reflect softer import demand associated with weaker industrial activity rather than solely improved competitiveness . The trade data therefore supports an external improvement while leaving room for different drivers behind import trends.
Dependence on domestic demand and fiscal support; investment needs industrial traction
The economy was described as not weak but increasingly dependent on domestic demand, services and fiscal support. Retail, wages and credit were doing more of the work that industry would normally be expected to contribute. With inflation under control and public investment continuing, this structure could sustain growth near term.
The same setup also creates vulnerability because consumption-led resilience cannot fully replace export-oriented manufacturing, energy security and productivity growth . The investment reading highlighted that Serbia’s macro balance sheet remains credible but requires a stronger industrial pulse.
The source links the need for investment momentum to manufacturing normalisation and energy-sector clarity, alongside more durable external demand from Europe’s industrial core . Growth near 3.0%
