Serbia Investment

Economic growth increases in the first quarter of 2026

GDP growth accelerates for a fourth consecutive quarter: According to a second release, Serbia's GDP expanded by an upwardly revised 3.2% in annual terms in Q1, following a 2.2% expansion in the prior quarter and accelerating for the fourth straight quarter. Q1's reading was the strongest since Q4 2024. That said, on a seasonally adjusted quarter-on-quarter basis, the economy grew 0.2% in Q1, following 1.0% growth in the prior quarter. This slowdown suggests that much of the annual improvement stemmed from a favorable base effect rather than stronger carry-over momentum.

Household consumption leads the upturn: Compared with the previous period's data, readings in Q1 improved for private consumption (+4.8% on a year-on-year basis vs +3.7% in Q4) and government consumption (+5.1% vs +4.1% in Q4). In contrast, readings softened for fixed investment (+1.4% vs +8.9% in Q4), exports of goods and services (+4.6% vs +5.4% in Q4) and imports of goods and services (+3.6% vs +7.6% in Q4). Household spending powered economic growth, prolonging its year-long acceleration trend amid January’s minimum wage hike, robust wage growth and a still-tight labor market. Moreover, government consumption picked up further, as presidential and parliamentary elections are set for May and December 2027, respectively, though snap general elections this year are a strong possibility. Still, fixed investment growth slowed sharply, likely reflecting uncertainty over U.S. sanctions and the sale of Russian-owned oil company NIS.

Panelist insight: Erste Group’s Mate Jelic said: “Serbia’s growth outlook remains anchored in domestic demand, with private consumption now firmly in the lead. Household spending continues to benefit from solid wage dynamics, a tight labour market and firm credit growth. While recognizing that the energy-driven lift in headline inflation will compress real incomes and should cool the pace in 2H26, wage growth is also stronger than forecasted thus offsetting the inflation impact. Large public-infrastructure projects and Expo 2027 linked construction will support investment, with energy and transport projects adding momentum. […] Bottom line, we have upgraded our expectations for FY26 real GDP growth.”

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