Serbia flag Serbia: Economic and Political Overview

The economic context of Serbia

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

The economy of Serbia experienced rapid growth in 2001–2008, although the global financial crisis hit hard on the country’s economy, showing its structural weaknesses and the need for a full transition to a market economy. Despite turning into negative territory in 2020 as a consequence of the COVID-19 crisis, Serbia’s GDP returned to growth in 2021: mainly driven by private consumption and investment, the economy grew an estimated 6.5% (IMF). After exceeding its pre-pandemic output level in 2021, GDP is expected to return to its pre-crisis rate of expansion of around 4.5% in 2022 and 2023, although headwind risks to the forecast persist (including new waves of contagion, supply-side bottleneck and rising inflation).

The robust package of economic measures taken by the authorities to alleviate the negative effects of the pandemic temporarily pushed up public debt, but it ill remained among the lowest in Europe. In 2021, the debt-to-GDP ratio was estimated at 59.9% (from a level of 52.8% before the crisis); although it is expected to follow a downward trend this year and the next (at 58.2% and 55.5%, respectively). The government balance was negative by 7.2% in 2021, despite the phasing out of most crisis support measures, partially counterbalanced by a substantial new package of support adopted in April, which included wage subsidies to all enterprises, one-off payments to citizens and specific support to the most affected sectors. The IMF sees the deficit gradually decreasing to 3.5% of GDP in 2022 and 1.6% the following year. Inflation accelerated strongly in 2021, mostly reflecting the sharp rebound of oil and food prices, reaching 3%. It is expected to decelerate marginally (to 2.7% this year and 2.5% in 2023 – IMF).  Meanwhile, negotiations for the EU membership continue: in 2021, Serbia has met the criteria to open two new sets of chapters in the EU accession talks (including the Green Agenda and sustainable connectivity), although the normalisation of relations with Kosovo is slow and those with Croatia and Bosnia-Herzegovina are complicated. The main challenges that Serbia faces are: stagnant household incomes, a need for private-sector job creation and structural reform of public enterprises as well as strategic reforms in the public sector. An ineffective judicial system, a high level of corruption and an ageing population represent other challenges that the country will have to face in the long term.

Serbia's unemployment rate, relatively low compared to its neighbours in the Balkans, remains significantly higher than the European average. Despite the negative economic impact of the COVID-19 pandemic, unemployment decreased to 9.3% in 2021, mostly as a consequence of falling labour market participation. The rate is expected to remain stable in 202 before slightly decreasing to 9% in 2022 (IMF). The standard of living of the Serbian population remains significantly below the EU average and the country's informal sector is substantial. However, the authorities have the support of the EU and international financial institutions to modernise infrastructure and support investment in the business community. Eurostat estimates that the number of people at risk of poverty has fallen further to 29.8% in 2020 (was 39.5% five years ago).

 
Main Indicators 20202021 (e)2022 (e)2023 (e)2024 (e)
GDP (billions USD) 53.3463.0762.7268.6875.63
GDP (Constant Prices, Annual % Change) -0.97.43.52.73.5
GDP per Capita (USD) 7991011
General Government Balance (in % of GDP) -5.9-4.3-2.6-1.1-0.5
General Government Gross Debt (in % of GDP) 58.757.954.450.347.3
Inflation Rate (%) 1.64.111.58.34.2
Unemployment Rate (% of the Labour Force) 10.110.19.99.79.5
Current Account (billions USD) -2.20-2.77-5.24-4.78-3.79
Current Account (in % of GDP) -4.1-4.4-8.4-7.0-5.0

Source: IMF – World Economic Outlook Database, October 2021

Note: (e) Estimated Data

Main Sectors of Industry

Serbia has a workforce of 3.16 million out of its 6.9 million population. The agricultural sector accounts for 6.5% of the country's GDP (its share has been decreasing in the past years), employing nearly 15.6% of the workforce (World Bank, latest data available). Serbia has 3.4 million hectares of agricultural land. Continental climate with cold winters and hot humid summers is ideal for intensive fruit production. Fruit production consists mainly of apples, grapes, plums, peaches, pears and berries. Recently Serbia has been widely using fruit processing to obtain products like brandies, jams, juices, compotes. The main crops are maize and wheat, together with barley, oat and rye.

Serbia has significant quantities of coal, lead, zinc, copper and gold, but the lack of investment, which has affected the mining sector for several years, prevents the country's economy from benefiting from this wealth. The industrial sector is likewise in need of modernisation and foreign investment. It contributes 24.8% to the country's GDP and employs 27.4% of the workforce. The country’s main industries include automotive, food processing, chemicals, base metals, furniture, pharmaceuticals, machinery, sugar, tires and clothing. The manufacturing sector is estimated to account for 13.2% of GDP. According to the national statistical institute, Serbia's industrial production increased by 6.3% year-on-year in 2021.

Services make up the main sector of activity and accounts for 51.5% of Serbia's GDP, employing 57% of the workforce. The IT industry is one of the fastest-growing, same as for the tourist sector which represented 6.9% of GDP before the pandemic. However, following the Covid-19 pandemic and travel restrictions, the Serbian tourism sector recorded only 871,239 foreign tourists in 2021: although it marks an increase of 95% compared to the previous year, this figure is still half of the ones recorded before the pandemic (Statistical Office of the Republic of Serbia). Concerning the banking sector, foreign banks account for 86% of the market, while state-owned banks and domestic private banks account for 7% each (EBF).

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 15.6 27.4 57.0
Value Added (in % of GDP) 6.5 24.8 51.5
Value Added (Annual % Change) 4.2 -0.8 -1.8

Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.

 

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Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}

Score:
67,2/100
World Rank:
54
Regional Rank:
30

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 

Business environment ranking

Definition:

The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

Score:
6.04/10
World Rank:
54/82

Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024

 

Country Risk

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Sources of General Economic Information

Ministries
Ministry of Finance
Ministry of Economy
Statistical Office
Statistics Office of Serbia
Central Bank
National Bank of Serbia
Stock Exchange
Belgrade Stock Exchange
Economic Portals
The World Bank in Serbia
 

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Latest Update: November 2022