Economic studies


Population 7.2 million
GDP per capita 6,123 US$
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major macro economic indicators

  2013 2014 2015(f)  2016(f)
GDP growth (%) 2.6 -1.8 0.8 1.7
Inflation (yearly average) (%) 7.8 2.1 1.4 2.4
Budget balance (% GDP) -5.5 -6.6 -3.8 -3.5
Current account balance (% GDP) -6.1 -6.0 -4.8 -4.5
Public debt (% GDP) 59.4 71.0 76.5 79.0


(f) Forecast


  • Opening of negotiations for accession to the European Union
  • Access to Central and Eastern Europe by the Danube
  • Presence of deposits of mineral raw materials (coal, copper, lead…)
  • Substantial foreign exchange reserves (a third of GDP)
  • Remittances from expatriate workers


  • Imbalances in the public and external accounts
  • Poor geopolitical and commercial environment
  • Dependence on external funding
  • Timidity of foreign investors
  • Landlocked country with inadequate infrastructures
  • Weak banking sector



A slight recovery of growth driven by investments

The Serbian economy is gradually emerging from the recession of 2014. This recovery is buoyed by lower commodity prices, as well as by increased foreign demand. The construction sector is expected to continue to sustain activity in 2016 (+12.6% in 2015 compared with the previous year). Activity is also set to be driven by the mining sector, the extractive industries and electricity production. The primary sector's contribution to GDP, having been hit by floods in 2014 and drought in 2015, is expected to shrink in 2016.

On the demand side, the activity rebound in 2016 could be explained by the dynamism of investment, particularly in the area of road, rail and electricity infrastructures.  Serbian investment is set to continue benefitting from Russian loans and Chinese investments, and possibly to some extent by European pre-accession funds (EUR 1.5 billion in 2020) could also support it. Moreover, the ongoing fiscal consolidation programme is expected to continue putting pressure on public consumption. Private consumption is likely to decline as a result of reduced social transfers and the decline in real wages.


A weak budgetary situation and an ambitious consolidation plan

A drastic fiscal consolidation programme has been underway since the end of 2013. The plan aims to cut spending and to approach equilibrium in the primary balance (excluding interest on debt) during 2016. There was a marked reduction in the public deficit in 2015, as a result of massive efforts which are not likely to be repeated on the same scale in 2016: these efforts relate mainly to revenues based on a rise in VAT, customs duties and taxes on oil products and tobacco (note that these exceptional revenues were also collected in 2015). Spending is also being reduced, thanks to cuts in public sector jobs, a wage freeze and cuts in subsidies to publicly-owned enterprises.

Admittedly public debt is expected to remain substantial and to grow slightly but its profile remains relatively favourable: it is mainly denominated in foreign currencies, but the cost of borrowing is not very high in view of the favourable terms granted by international and bilateral funders.

With regard to the external accounts, the current account deficit is expected to stabilise in 2016 after improving sharply in 2015, due to an increase in foreign direct investments and foreign portfolios. The trade deficit is expected to widen slightly in 2016, but it will be offset by higher expatriate remittances. Exports are concentrated by sector and are divided between Western Europe and former Yugoslavia.


The newly reelected government should pursue public sector reform

EU accession negotiations began in January 2014. Progress will depend on the normalisation of relations with Kosovo with which a “historic” agreement was concluded in August 2015, relating to 4 areas - energy, telecommunications, autonomy and justice - making it possible to anticipate accession in 2020. Serbia’s relations with the former Yugoslav republics remain antagonistic, because they are still marked by the war of the 1990s. On the other hand, the country maintains good relations with Russia, characterised by historic, cultural and religious proximity as well as by significant financial support.
Early elections he himself called on April 24, 2016 gave again the Prime Minister Aleksandar Vučić and the Serbian Progressive Party (SNS) an absolute majority (131 out of 250 seats, with 48.25% of the votes and a 56 % participation rate), which should allow them to continue reforms, especially those aimed at fiscal consolidation, with the goal of EU membership.
The business climate is still very restricted by administrative delays, corruption and political interference in administration and justice. However, there are prospects of improvement relating particularly to the granting of building permits in the context of the EU accession process.




(Last update : April 2016 )

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