Serbia’s 2026 business outlook: AI push meets a cooling FDI cycle

Serbia’s business climate in 2026 is being shaped by two competing forces: a slowdown in the pace of foreign investment and a simultaneous push to upgrade the country’s digital and AI capabilities. For investors, the mix matters because it signals a shift from broad, manufacturing-led inflows toward more selective, technology-oriented projects—supported by government spending on computing capacity, public-sector software upgrades, and incentives for AI development.

FDI inflows cool after record 2024

Foreign direct investment has been central to Serbia’s post-transition growth model, supporting export-oriented manufacturing clusters across automotive components, electronics, and light industry. In 2024, Serbia recorded record-high FDI inflows of around €5 billion, reflecting strong investor interest and earlier structural reforms such as tax incentives and improved infrastructure.

However, available data for the first quarter of 2026 points to a noticeable slowdown. Analysts link the deceleration to weaker external demand from the European Union, higher global borrowing costs, and the perception that some of the “easiest” investment opportunities have already been taken.

Even so, the story is not described as a collapse. Interest remains strongest in areas including renewable energy, IT startups, and agribusiness—sectors where Serbia can offer relatively low labor costs, a growing pool of technical talent, and proximity to EU markets. In this framing, Serbia’s FDI cycle is rotating: from large-scale manufacturing projects toward more specialized investments with higher technology content.

Digitalization and AI become the modernization centerpiece

Against this shifting investment backdrop, Serbia’s government has made digitalization and artificial intelligence its flagship modernization agenda. The stated objective is to position Serbia as a regional leader in AI and digital services by building on an existing base of IT professionals and an expanding startup ecosystem.

A key component is a planned investment program of about €100 million in AI development by 2026. Funds are earmarked for several elements: a new supercomputer available to researchers and startups; software upgrades for the public sector with emphasis on healthcare, energy, and transport; and targeted incentives aimed at AI-based innovation.

The government’s approach is designed to create “digital infrastructure” that can both reduce the cost of delivering public services and lower barriers for private-sector AI projects. By providing high-performance computing resources free of charge to academic institutions and small companies, authorities aim to stimulate AI-driven applications in fields such as medical diagnostics assistance, energy-grid optimization, and smart-city mobility management.

Regulatory alignment is also part of the plan. The authorities are working to align Serbia’s regulatory framework with emerging EU standards—including the forthcoming EU AI Act—to help Serbian AI startups operate domestically while also functioning across the EU single market.

E-government upgrades aim to cut transaction costs

Beyond AI-specific spending, Serbia’s broader digital-economy priorities include expanding 5G coverage, improving e-government platforms, and promoting open-data policies that allow businesses and researchers to reuse public-sector information. The intended payoff extends beyond modernizing state administration: measures are meant to lower transaction costs for firms by reducing red tape, shortening approval timelines, and improving transparency in licensing and public procurement.

For foreign investors assessing risk in real time, Serbia is also signaling stability through a relatively predictable tax regime alongside selective incentives for strategic sectors. Infrastructure investment continues—covering roads, railways, and energy networks—to support logistics and industrial activity.

At the same time, policymakers recognize that business conditions must be balanced against social-policy goals. Rising wages, social-security contributions, and administrative requirements can all affect the net cost of doing business even as Serbia seeks to move up the value chain.

A recalibration toward specialized growth

Taken together, Serbia’s 2026 business-climate narrative is one of recalibration rather than retreat: moving away from dependence on broad-based low-cost manufacturing FDI toward a more specialized model anchored in digitalization and innovation. Whether this strategy delivers will depend on how effectively Serbia manages labor-market imbalances, maintains macroeconomic stability, and keeps its regulatory environment aligned with fast-evolving global technology expectations.