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 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).

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