Serbia overview

Cityscape nearby the river

In Serbia we focus on:

Enhancing the role and competitiveness of the private sector. Serbia’s level of private sector engagement in the economy is modest even by regional standards. Small and medium sized enterprises (SMEs), which form the backbone of the Serbian private sector, face limited access to finance. The EBRD will thus work to increase private sector competitiveness, with an added focus on the agribusiness value chain. We will seek to assist SMEs in financing projects conducive to sustainable growth. Finally, we will further support pre-privatisation and privatisation alongside strategic investors.
Bolstering the banking sector and deepening the financial intermediation. While the financial sector has survived the crisis, its role as a driver of economic growth has been significantly diminished. Credit growth is weak, the share of non-performing loans is significant and the level of euroisation is high. In line with the Joint IFI Action Plan for Growth in Central and South-Eastern Europe, we will seek to help stabilise the financial sector. We will continue our policy dialogue, directly with the National Bank and through the Vienna Initiative 2.0, to encourage local currency lending and improve cross-border cooperation on banking sector issues and help in resolving the problem of NPLs.
Developing sustainable and efficient public utilities. Large transition gaps remain in the energy and infrastructure sectors. Other transition challenges include: adjusting tariffs to cost recovery levels, strengthening the regulators’ capacity, commercialising and restructuring public enterprises, and increasing private sector participation. The EBRD will focus its efforts on accelerating the implementation of its already financed projects and, given the limited fiscal space, will carefully select new investments. In the energy sector in particular, we will aim to continue to play a key role in promoting energy efficiency and renewable energy, while assisting with replacing the aging electricity generation capacity and bringing power generation into compliance with the EU environmental standards.

The EBRD latest Serbia Strategy was adopted on 27 February 2018

Current EBRD forecast for Serbia’s Real GDP Growth in 2017 1.8%

Current EBRD forecast for Serbia’s Real GDP Growth in 2018 2.9%

Serbia diagnostic paper

After recording a 2.8 per cent growth in 2016, the Serbian economy is expected to slow to 1.8 per cent in 2017. The slow-down is a consequence both of the summer drought which badly affected the agriculture sector, and difficulties in the mining and electricity generation, sectors which are dominated by state-owned companies.

On the expenditure side, household consumption continues to recover on the back of rising employment and a pick-up in retail lending. Despite somewhat slower investment growth, domestic demand will still be the main GDP driver. Exports of goods and services are likely to repeat the double-digit growth from previous years but higher import growth due to stronger domestic demand may result in negative contribution of net exports.

Growth is projected to accelerate to 2.9 per cent in 2018. Faster growth should be supported by the low base, stronger consumption and investments, with offsetting effects from higher imports. Although fiscal performance has continued to be better than envisaged (with a budget surplus in January-August 2017), the slow-down of fiscal as well as structural reforms are the main downside risks to the projection.

Serbia in the EBRD’s 2017-18 Transition Report

Serbia in the latest BEEPS survey