Economic Outline

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 from 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 rebounded strongly in 2021 (+7.4%) and continued its positive trend in 2022 when growth was estimated at 2.3% by the Statistical Office of Serbia, with domestic demand as the main source of growth. Amid ongoing weakness in export markets, the IMF forecasts a GDP increase of 2.4% for 2023, before growth revives to 3.5% in 2024 as monetary policy is eased, lower inflation reduces pressure on disposable incomes and external conditions improve.

The general government budget recorded a deficit of 3.1% of GDP in 2022 (from 4.1% one year earlier), lower than the target of 3.9% set in the revised budget adopted in November, as inflation fuelled tax revenue and contained current expenditure growth, partly balancing net lending of around 1.8% of GDP to cover losses in the energy sector. The 2023 budget projects a 3.3% deficit with total revenue of EUR 15.75 billion, 7.8% more than in the amended 2022 budget. Tax revenues are planned in the amount of EUR 13.61 billion, and non-tax revenues in the amount of EUR 1.71 billion. The public debt-to-GDP ratio stood at an estimated 54.4% in 2022 and should follow a downward trend in 2023 (50.3%) and 2024 (47.3% - IMF) thanks to continued primary surpluses. Inflation reached an 11-year high in December 2022 and averaged 11.5% over the year. Due to the expected increase in inflation in the 1st quarter of 2023, the National Bank of Serbia continued with a strong increase in the reference interest rate by 50bp to 5.0%. For the year as a whole, inflation is expected to remain high but somewhat moderate to 8.3% in 2023, with a more consistent decrease the following year (4.2% as per the IMF projections). Meanwhile, negotiations for EU membership continued: Serbia has met the criteria to open 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 negotiations are expected to end in 2024. 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: in 2022, it stood at 9.9%, with a marginal decrease expected in the next couple of years (9.5% in 2024 as per the IMF projections). 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 fell further to 29.8% in 2020 (was 39.5% five years earlier), while the GDP per capita (PPP) stood at USD 24,084 in 2022 (IMF).

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