Serbia’s economy accelerated in the second quarter of 2026, with preliminary data showing real GDP growth of 3.6% year-on-year, an improvement from 3.2% recorded in the first quarter, as stronger household spending, investment activity and export performance supported economic expansion.
- Economy rebounds after weaker 2025 performance
- Household demand remains a key growth driver
- Industrial production records modest expansion
- Labour market shows continued employment decline
- Foreign trade narrows six-month deficit
- June trade data highlight changing import dynamics
- Growth outlook remains below second-quarter pace
The Statistical Office of Serbia will publish the full expenditure and sectoral breakdown on 31 August, providing further detail on the contribution of household consumption, investment, government expenditure and net exports to second-quarter growth.
Economy rebounds after weaker 2025 performance
The latest GDP estimate follows a slower 2025, when Serbia’s economy expanded by 2%, compared with 3.9% growth in 2024. Last year’s performance reflected weaker external trade, geopolitical disruptions and domestic political uncertainty that affected corporate investment and industrial production.
The second-quarter result indicates that economic activity has strengthened toward Serbia’s medium-term growth trend, although the available data do not yet confirm the investment-led expansion targeted ahead of EXPO 2027.
Household demand remains a key growth driver
Recent economic indicators point to stronger domestic demand than industrial production. Real retail turnover increased by 7% during the first half of 2026, while average net earnings rose by 8.2% in real terms between January and May. The average monthly net salary reached RSD 118,398 in May, while the median net wage stood at RSD 93,277, indicating differences in income distribution across the labour market.
Higher real wages combined with moderating inflation have improved household purchasing power after several years of elevated food, housing and energy costs. Annual inflation eased to 2.7% in June, while retail sales volumes remained 4.3% higher than in the same month of the previous year. Although retail growth moderated from the exceptionally strong pace seen earlier in 2026, household consumption continued to provide support for overall economic activity during the second quarter.
Industrial production records modest expansion
Industrial activity remained comparatively subdued despite stronger GDP growth. Industrial production increased by 0.8% year-on-year in June and by 0.7% over the first six months of 2026. Within the industrial sector, manufacturing expanded by 2.8% in June, while mining output declined by 1% and production of electricity, gas and steam fell by 10.4%.
Seasonally adjusted data showed weaker short-term momentum, with total industrial production declining 0.4% month-on-month and manufacturing contracting 1.3%. The figures indicate that domestic demand has outperformed industrial output during the current phase of economic recovery.
Labour market shows continued employment decline
Employment data also reflected uneven economic conditions. Serbia recorded 2.356 million registered employees during the second quarter, representing a decline of 14,163 jobs compared with the same period of 2025. Manufacturing accounted for the largest reduction, with employment falling by 17,422 positions, while wholesale and retail trade lost 4,276 jobs. Economic output and consumer spending can continue expanding despite lower employment when businesses improve productivity, automate operations or increase utilisation of existing production capacity.
Foreign trade narrows six-month deficit
External trade performance provided additional support to economic growth. Merchandise exports increased by 8.3% during the first half of 2026 to €17.97 billion, while imports rose by 3.7% to €21.68 billion.
The merchandise trade deficit consequently narrowed to approximately €3.71 billion, compared with €4.32 billion in the corresponding period of the previous year. Growth in exports of capital goods and intermediate goods suggests that part of the recovery is linked to expanding industrial production capacity in addition to domestic consumption.
June trade data highlight changing import dynamics
Monthly trade figures for June presented a different picture. Imports increased by 17.3% year-on-year, exceeding the 9% rise in exports and widening the monthly trade deficit to €777.5 million. The increase in imports may reflect purchases of machinery and equipment associated with industrial investment and infrastructure projects.
Higher imports may also indicate stronger domestic consumption and investment demand for foreign-produced goods. The detailed GDP data scheduled for release on 31 August are expected to provide greater clarity regarding the balance between productive investment and import-driven domestic demand.
Growth outlook remains below second-quarter pace
The second-quarter GDP growth rate exceeded the principal full-year forecasts published by leading economic institutions. In May, the National Bank of Serbia reduced its 2026 growth forecast to 3%, while the International Monetary Fund projected annual growth of 2.75%, reflecting uncertainty linked to energy prices, regional trade developments and the conflict in the Middle East.
Both institutions expect household consumption and investment to remain the principal drivers of economic activity, with government infrastructure investment and projects linked to EXPO 2027 continuing to support fixed-capital formation.
Serbia entered the second half of 2026 with stronger economic momentum, supported by higher consumer spending, rising real wages and expanding exports, while industrial production and employment continued to show more limited growth. The detailed GDP release later in August will provide further evidence on whether second-quarter expansion was driven primarily by productivity-enhancing sectors and export-oriented activity or by domestic consumption, public expenditure and base effects.
