Serbia’s economic growth is expected to strengthen to 3.1% in 2026 and 3.7% in 2027, with export expansion, household incomes and public investment supporting activity despite weaker conditions in major European markets. The World Bank expects growth to ease to 3.5% in 2028, following an estimated slowdown to around 2% in 2025.
The recovery is increasingly being supported by a combination of domestic demand and stronger external sales. Real wage growth, expanding bank lending and higher government expenditure are sustaining consumption, while exports are providing an additional source of growth as weak EU activity weighs on manufacturers across Central and Southeast Europe.
Goods exports and automotive production strengthen
Serbia exported €21.1 billion of goods, an increase of 8.8% compared with the corresponding period of the previous year. Imports rose 4.4% to €25.5 billion, resulting in a 12.6% reduction in the merchandise trade deficit to €4.41 billion. The automotive industry has become an important contributor to the stronger export performance. Serbian vehicle production increased by nearly one-third, supported by the expansion of battery-electric vehicle production and exports to Italy.
Electric-vehicle manufacturing in Kragujevac has involved substantial investment in production technology and adjustments across the supplier base. The activity is also linking Serbia more closely with the European shift toward electric transport. Further increases in vehicle production could raise the contribution of automobiles and related components to Serbian exports as some traditional European automotive suppliers face weaker orders.
Public investment and consumption support domestic activity
Domestic investment remains another major source of economic activity. Large public infrastructure programmes, including transport projects and investments connected with Expo 2027, are supporting construction and government capital expenditure. Serbia’s second-quarter GDP increased 3.8% year-on-year, while retail turnover rose 7.3% in real terms, reflecting continued household consumption.
Tourism is providing an additional source of activity. The World Bank identified Belgrade as an increasingly important regional aviation and transit hub, supported by expanding international connectivity. The combination of public investment, household consumption, tourism and stronger exports is providing several sources of economic growth.
Government forecast exceeds World Bank projection
The Serbian government has a more optimistic growth outlook than the World Bank. Finance Minister Siniša Mali said the government expects economic growth of 3.5%-3.7% in 2026, with GDP reaching approximately €97 billion. The government also expects growth to exceed 4% in 2027, with activity related to Expo 2027 providing an additional boost. Meeting the upper end of the government forecast would require continued strength in industrial production, exports and domestic demand.
European exposure leaves economy vulnerable to external pressures
The World Bank identified several external risks, including higher energy costs, weak EU growth and increasing global competition affecting industrial activity and automotive supply chains across Europe and Central Asia. The European Union accounts for almost 59% of Serbia’s total merchandise trade, leaving Serbian manufacturers exposed to a prolonged slowdown among European trading partners. Energy prices and geopolitical disruption represent additional risks to economic activity.
At the same time, the increase in exports gives manufacturing a larger role alongside domestic consumption and public investment as Serbia’s economic activity strengthens. Electric vehicles and other higher-value manufactured goods will be among the areas determining the contribution of exports as the investment cycle associated with Expo 2027 develops.
