The analysts from Macroeconomic Trends and Analysis magazine (MAT) state that Serbia’s economic growth in the first five months of 2026 was driven by trade and services, while construction activity slowed slightly; exports are rising faster than imports, but industry continues to be weighed down by issues at NIS and the Smederevo steelworks (Železara Smederevo).
Serbia’s real gross domestic product (GDP) increased by around 3.6 per cent year-on-year in the first five months of 2026. Viewed from the production side, with the exception of construction, which recorded a minor decline (a negative contribution of minus 0.55 per cent), all other sectors achieved real year-on-year growth in activity. Leading the way are other services and net taxes, as well as wholesale and retail trade. The achieved real GDP growth of 3.2 per cent in the first quarter of this year positions Serbia among the fastest-growing economies in Europe, according to analysts in the latest issue of MAT.
Total industrial production increased by 0.6 per cent, and the manufacturing industry by 1.6 per cent.
“When viewed in isolation, the production of coke and refined petroleum products is no longer leading the slowdown in the manufacturing sector. That position is now held by the manufacture of basic metals,” states Ivan Nikolić, editor of MAT, recalling that US sanctions on Russian ownership pushed NIS into a crisis due to restricted supply and interrupted production continuity.
Given the strong linkages between this sector and other parts of industry, its standstill has multiple direct, indirect, and induced effects on the overall dynamics of the manufacturing industry, Nikolić points out.
“On the other hand, various forms of EU protectionist measures are significantly hindering production at the steelworks in Smederevo. Therefore, both of these production areas are limited solely by external constraints,” Nikolić explains.
Regarding external trade, it continues to grow, with significantly faster growth in exports compared to imports, resulting in a more favourable import-to-export ratio.
“In the period from January to May 2026, exports covered around 83.1 per cent of commodity imports, which is a better result than a year earlier, when this ratio stood at 77.9 per cent,” MAT adds.
According to Eurostat records, Serbia was also at the European peak in terms of year-on-year growth in real retail trade turnover in the first five months of 2026. In March, the average net salary was 10.9 per cent higher than the value of the average consumer basket, while compared to the value of the minimum consumer basket, it was 115.1 per cent higher. As for inflation, it is moving within the target range of the National Bank of Serbia, and a temporary deviation above the upper limit of the target might only occur towards the end of this year.
“However, an increase in year-on-year inflation has been recorded for the fourth consecutive month, largely caused by rising energy prices in the non-core inflation segment, but to a lesser extent it is also a consequence of an increase in core inflation,” MAT analysts state. In May 2026, Serbia had higher year-on-year inflation than the European Union average. It stood at 3.8 per cent, compared to 3.3 per cent in the EU, and 3.2 per cent in the eurozone. Out of the 27 European Union member states, eight countries had higher year-on-year inflation than Serbia in May 2026, with the highest rates recorded in Romania (9.7 per cent), Bulgaria (6.3 per cent), and Lithuania (5.1 per cent). In the eurozone, year-on-year inflation in May increased by 0.2 percentage points compared to April 2026, while this increase at the level of the entire EU amounted to 0.1 per cent.
Manufacturing sector records positive year-on-year trends
As early as the end of last year, MAT assessed that the manufacturing sector would operate under less favourable conditions in 2026 and that a slowdown in activity was imminent, primarily due to production issues at the NIS refinery. However, February brought a turnaround, with March and April results exceeding even the most optimistic forecasts.
The manufacturing sector continued to record positive year-on-year trends in May, but the growth dynamics slowed down considerably compared to previous months. In March, the industry recorded a year-on-year growth of as much as 8.4 per cent, followed by 5.3 per cent in April, and 1.4 per cent in May. In May, the physical volume of production increased in 13 out of 24 sectors, which make up 61.8 per cent of the manufacturing industry. Among them, as was the case in March and April, was the production of coke and refined petroleum products.
(Politika, 08.07.2026)
https://www.politika.rs/sr/clanak/769021/bdp-porastao-3-6-odsto-srbija-medu-najbrze-rastucim-ekonomijama
