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 2018: 2.9%

Current EBRD forecast for Serbia’s Real GDP Growth in 2019: 3.5%

Serbia diagnostic paper

After 2.8 per cent growth in 2016, the Serbian economy grew by only 1.9 per cent in 2017, primarily due to somewhat weaker exports and fast imports growth. On the production side, the main contributors to the growth slowdown have been the summer drought that badly affected the agriculture sector and problems in mining and electricity generation. Fiscal performance has continued to be better than envisaged. In recent years the budget deficit
turned from 6.6 per cent of GDP in 2014 to a surplus of 1.2 per cent of GDP in 2017, while public debt dropped below 65 per cent of GDP by the end of 2017. Despite relatively high FDI inflows (at 6.6 per cent of GDP in 2017), total investment remains below 20 per cent of GDP, a level which is lower than needed for a meaningful convergence towards EU standards. Economic growth is expected to accelerate to 2.9 per cent in 2018 and 3.5 per cent in 2019. Faster growth should be supported by the low base as well as strengthening consumption and investment activities, with offsetting effects from higher imports. A possible slowdown or pause in fiscal and structural reforms represents the main downside risk to the projection.

Serbia in the EBRD’s 2017-18 Transition Report

Serbia in the latest BEEPS survey