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 11 April 2014

Current EBRD forecast for Serbia’s Real GDP Growth in 2016 1.8%

Current EBRD forecast for Serbia’s Real GDP Growth in 2017 2.3%

Serbia returned to growth in 2015 despite a programme of fiscal adjustment. GDP grew by 0.7 per cent on the back of a low base after the floods in 2014, increasing private investment and pick-up in exports. Lower oil prices and monetary easing have also supported the recovery. We forecast an acceleration of growth to 1.8 per cent in 2016 and 2.3 per cent in 2017. Private investment will continue to be the main growth driver, supported by a gradual recovery of consumption. Upside risk for the projection (potentially adding 1.0-1.5 percentage points to growth in 2017) comes from potential upscaling of production in the recently privatised large steel mill, with the new Chinese owner announcing ambitious investment and production plans. Medium-term prospects are favourable, but will depend on the pace of reforms needed to further improve the investment climate, support NPL resolution and corporate restructuring with a view to unlocking credit growth, and speed up the implementation of major infrastructure projects.

Serbia in the EBRD’s 2015-16 Transition Report

Serbia in the latest BEEPS survey