Serbia’s economy has experienced significant growth, with a reported 3.8% increase in GDP year-on-year for the second quarter of 2026, following a 3.2% rise in the first quarter. This growth rate is among the highest in Europe, primarily driven by retail, wholesale trade, and construction sectors. However, experts are raising concerns about the sustainability of this growth model, which heavily relies on consumer spending and state investments.
According to data from the Republic Statistical Office (RZS), the economic expansion was largely fueled by a 9.1% increase in the construction sector, a 5.8% rise in professional, scientific, and technical services, and a 4.4% growth in trade, transport, storage, accommodation, and food services. Household consumption increased by 4%, while government spending rose by 2.5%. Gross investments in fixed assets were up by 3.3%, and exports of goods and services grew by 4.1%. However, imports increased at a faster rate of 5.2%.
Veljko Mijušković from the Faculty of Economics in Belgrade highlighted that while domestic demand, particularly consumer spending, is currently a significant driver of economic activity, investments and exports also contribute. Despite these positive indicators, Mijušković cautioned that the current growth structure is not ideal for long-term sustainability. He emphasized the need for a growth model that increasingly relies on private investments, productivity growth, technological advancements, and the export of high-value-added goods and services.
Milorad Filipović, another professor at the Faculty of Economics, echoed these concerns, describing the current growth as “one-off” and unsustainable in the long run. He warned that continued reliance on consumer spending and state investments, coupled with rising government debt, could lead to economic collapse. Filipović also expressed skepticism about preliminary GDP estimates, noting that they often undergo revisions.
Looking ahead, Mijušković suggested that maintaining the current growth rate throughout the year will depend on various factors, including the continuation of the investment cycle, real wage and consumption growth, agricultural performance, industrial production trends, export demand from the European Union, particularly Germany, and geopolitical and energy risks. He projected a GDP growth range of about 3% to 3.5% for 2026, assuming no major external economic or energy shocks. For 2027, Mijušković sees the potential for acceleration towards 4% growth, driven by ongoing large investment cycles and activities related to EXPO 2027. However, he stressed that sustaining such growth rates will require successful productivity enhancements.
The current economic scenario in Serbia underscores the challenges of balancing immediate growth with long-term sustainability. While the recent GDP figures reflect a robust economic performance, the reliance on consumer spending and state investments raises questions about the future stability and health of the economy. The emphasis on diversifying growth sources and enhancing productivity will be crucial for Serbia to maintain its economic momentum in the coming years.
