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
Serbia's policy response to the coronavirus crisis
The EBRD is monitoring Serbia's policy response to the coronavirus pandemic. Our biweekly publication identifies the major channels of disruption as well as selected impact and response indicators.
Current EBRD forecast for Serbia’s Real GDP Growth in 2020: -3.5%
Current EBRD forecast for Serbia’s Real GDP Growth in 2021: 6.0%
GDP grew by 4.2 per cent in 2019, a minor slowdown compared with 2018 (4.4 per cent), despite poor industrial performance in the first half of the year. Economic activity picked up in the second half of 2019, boosted by industrial output returning to growth and strong construction activity, supported by the building of the TurkStream gas pipeline. Strong fiscal performance continued: the 2019 budget recorded a small deficit (0.2 per cent of GDP), while public debt stood at 53 per cent of GDP at the end of 2019, significantly below the level of just a few years ago.
Inflationary pressures remain subdued and, after three cuts of 25 basis points each in 2019, the central bank lowered the key policy rate by another 75 basis points in total in March and April 2020, to 1.5 per cent. The latest cuts sought to mitigate the economic effects of the pandemic. The Covid-19 crisis also prompted S&P to revise the outlook on Serbia's longterm credit rating from positive to stable in
early May 2020, but without changing the rating.
In recent years, Serbia has increased its integration into global supply chains, mainly with the eurozone countries. The epidemic has disrupted international trade and forced several large manufacturers in Serbia to close temporarily. In light of the Covid-19 crisis, GDP is expected to fall by 3.5 per cent in 2020, recovering in 2021 by 6.0 per cent.
Serbia in the EBRD’s 2019-20 Transition Report