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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 2023: 2.0%

Current EBRD forecast for Serbia’s Real GDP Growth in 2024: 3.5%

GDP growth slowed to 2.3 per cent in 2022 as household consumption growth moderated in the face of inflationary pressures. A decline in government consumption in the middle of 2022, coupled with weak investment growth, contributed to a sharp drop in construction activity. The current account deficit widened on account of higher energy imports but was entirely covered by inflows of foreign direct investment, which reached a record-high in nominal terms and a third of which came from China. The milder than expected winter of 2022-23 and stabilisation of electricity production softened the impact of high energy prices on external and fiscal accounts.

GDP growth is expected to slow down further to 2 per cent in 2023 before recovering to 3.5 per cent in 2024, a level closer to the medium-term potential growth. Household consumption is set to remain subdued given persistent price pressures and a slowdown of credit growth in line with tight financing conditions. Inflation has yet to peak in Serbia as of March 2023, as ongoing increases of regulated energy prices feed into prices of other goods and services. In an environment of large financing needs and tight financial markets, liquidity is supported through a two-year Stand-By Arrangement with the IMF, which is focused on energy sector reforms, and a successful return to the external markets via two issuances in January 2023: a five-year Eurobond of US$ 750 million at a yield of 6.25 per cent and a 10-year Eurobond of US$ 1 billion at a yield of 6.50 per cent, both heavily oversubscribed.

Serbia in the EBRD’s 2022-23 Transition Report

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