After having acted as a driving force of Serbia’s economic growth in previous years, the construction sector has faltered this year, with forecasts suggesting that the drop in construction activity will significantly contribute to only modest GDP growth.
Some of the key problems facing this important sector of the domestic economy are reflected in the fact that nearly three quarters of construction companies finance their operations from their own resources, while the most successful firms are overwhelmingly foreign.
For several years now, construction has stood out as one of the key sectors underpinning Serbia’s economic growth, contributing between 5.5% and 6.4% to GDP and achieving an 11% rise in gross value added (GVA) in 2024. According to the Serbian Chamber of Commerce, the construction sector, with over 18,800 companies last year, accounted for nearly 14% of all businesses in Serbia.
Approximately 38% of construction companies were registered for building construction, 28% for specialised works, nearly one-fifth for architectural and engineering services, while the smallest number of firms (683) were engaged in producing non-metal mineral products. In addition to companies, slightly fewer than 54,000 sole traders were engaged in construction work in 2024.
The number of workers in construction grew at a rate of over 4% between 2020 and 2024, accounting for 8% of total registered employment in Serbia last year. The sector employed nearly 186,000 people, mostly in specialised construction works and building construction.
However, average wages are considerably lower in the sectors with the highest employment. Workers in specialised construction and building construction earned wages that were 29% and 17% below the national average, while salaries in civil engineering and architectural and engineering activities were 11% and 5% above the national average.
Last year, 30,437 construction permits were issued – one third more than in 2020, but 2.5% fewer than in 2023. The total value of completed works increased by 8.6% in current prices, while in constant prices the rise was 6% compared with 2023.
Exports and imports also decline
According to data from the National Bank of Serbia (NBS), construction service exports generated 294.1 million euros in 2024, with year-on-year growth of more than 20%. At the same time, imports amounted to 192.5 million euros, up nearly 17% year-on-year, resulting in a surplus of 101.6 million euros.
Yet when looking at the period from 2020 to 2024, it becomes clear that foreign trade activity has slowed, with average export declines of more than 8%, while imports fell by an average of 11%.
Of the total investment in construction amounting to 921.9 million euros, the largest share was allocated to the construction of other structures (311.1 million euros), followed by architectural and engineering activities (298.7 million), specialised construction works (141.7 million), the production of non-metal mineral products (98.6 million euros), while the smallest amount – 71.8 million euros – went into building construction.
In the five-year period (2020–2024), the total net inflow of foreign direct investment in construction activities reached 5.6 billion euros. The highest amount, 1.8 billion euros, was recorded in 2024 alone, accounting for more than 35% of all foreign investment in Serbia last year.
Nearly three-quarters of construction firms finance operations on their own
In terms of business performance, construction was the third most successful sector in Serbia in 2024, behind trade and manufacturing, and companies from this field were well represented on the list of the top 100 firms of 2024 published by the Business Registers Agency (APR).
Among the construction firms that generated the highest profit last year, Belgrade Waterfront leads with earnings of 7.5 billion dinars, followed by two Chinese companies – China First Highway Engineering (4.4 billion) and China Railway International (3.34 billion) – then the US–Turkish consortium Bechtel-Enka (3.3 billion) and Azerbaijani company Azvirt with 2.8 billion dinars in profit.
According to a survey conducted by the Chamber of Commerce at the end of last year among construction companies, investment in construction facilities and equipment makes up the largest share of current and planned investment for 2025, while the smallest allocations go to research and development.
Over the past year, almost three-quarters of construction companies financed their operations from their own funds, around 13% used loans, while state subsidies and other funding sources played only a minor role. In 2024, support from state institutions and local governments was used by just over 6% of construction firms.
Confidence in the business climate at its lowest since the pandemic
The end of last year marked a turning point for the construction sector. Construction activity has been in continuous decline since the fourth quarter of 2024, and according to the Statistical Office of the Republic of Serbia (RZS), in the second quarter of 2025 it was more than 16% lower compared to the same period last year. The value of works on buildings was the only segment to record growth, while the construction of roads, pipelines and other industrial structures fell by more than 26%.
This year, construction activity has slowed across the entire country, except in Belgrade, where activity increased by more than 19% in all areas of construction, driven primarily by projects related to Belgrade Waterfront and Expo. On the other hand, compared to the same quarter last year, the value of construction works in Vojvodina has nearly halved, in southern and eastern Serbia it has fallen by one third, while in Šumadija and western Serbia it has dropped by nearly 9%.
The RZS notes that, according to the economic sentiment indicator, confidence in the business climate is at its lowest level since 2020, the year marked by the pandemic, and that trade, industry and construction are the three sectors showing the strongest reservations when it comes to new business and employment.
Experts point out that square metres are “melting away” under the pressure of the economic crisis, which in Serbia is further deepened by political tensions, difficulties in financing, interest rates, inflation, bureaucratic procedures and a shortage of labour. It is estimated that around 30,000 construction workers have left the country, and that this gap in the labour market is difficult to fill with “imported” workers, who, according to insiders, are not cheap but simply the only ones available.
Modest growth in exports of construction materials
The slowdown in construction activity is also negatively affecting producers of construction materials, who are predominantly tied to the domestic market, as exports of these goods account for only 0.4% of Serbia’s total exports. According to RZS data, Serbia recorded a deficit of 15.6 million euros in 2024 in foreign trade involving brick, cement, concrete, mortar and stone. The situation during the first five months of 2025 was somewhat better, as exports increased year-on-year by 6.6% to 46.2 million euros, while imports fell by 1.2% to 48 million euros, with export coverage of imports standing at 96.2%.
More than half of construction material exports consist of brick and roof tiles, followed by ceramic tiles, while Serbia imports five times more cement than it exports. The domestic cement market is highly concentrated, with the largest producer, Lafarge, holding a market share of 30–40% for many years.
The Government of Serbia approved subsidies of 10.6 million euros in October for this Beočin-based company, which also appeared on last year’s “Top 100” list published by the Business Registers Agency, after it recorded a profit of 5.46 billion dinars. The investment is intended for the construction of a cement plant near Obrenovac. The investor promises to invest more than 112 million euros in the new production line, which will be more environmentally friendly. It should be recalled that the Carbon Border Adjustment Mechanism (CBAM) will come into force next year, imposing additional costs on the export of certain industrial products to the EU market, including cement.
(Biznis i Finansije, 24.11.2025)
https://bif.rs/2025/11/pad-gradjevinskih-aktivnosti-a-sada-nizbrdo/