In the mid-2010s, the Serbian economy showed
a slight recovery after many years of crisis and
problems. This does not mean that there are no major
challenges to address: high unemployment (not least
among the young); a budget deficit that, despite a rapid
decline, is still high and contributes to growing
government and foreign debt; widespread corruption and
deficiencies in the justice system.
An aging population means that pension payments take
up an unreasonably large portion of the state budget and
so do salaries for employees in the still large and
often inefficient and unprofitable public sector.
Despite many reforms, the emergence of a modern service
sector has been slow, while both agriculture and
industry are still important parts of the economy.
Major imports by Serbia, covering a full list of top products imported by the country and trade value for each product category.
The problems are partly due to the global financial
crisis of the 21st century and the subsequent euro
crisis, but mainly to the consequences of the 1990s war
and sanctions and the fact that there was a political
resistance to changes in the economic structure. Only in
2009 did GDP start to reach the same level as 1989.
Following Milošević's fall in 2000, Serbia received
large write-offs on its debts. With the help of pressure
and support from the World Bank, the International
Monetary Fund (IMF) and the EU, market economy reforms
have been implemented. Yet much remains to be done.
Serbia is far behind neighboring countries, for example
in terms of purchasing power of the population. In
addition, wages and pensions have not kept pace with
inflation (but still take an unreasonably large part of
the state budget and will need to be reduced).
Abbreviationfinder.org: Check this abbreviation website to find three letter ISO codes for all countries in the world, including SRB which represents the country of Serbia. Check findjobdescriptions to learn more about Serbia.
Economic ruin in Yugoslavia
Already when the old Yugoslav federation was divided
between 1991 and 1992, the economy was in a deep
structural crisis. When the UN Security Council
introduced financial sanctions against the new
Yugoslavia in 1992, the problems became even greater.
The cost of the wars in Croatia and Bosnia and
Herzegovina, to support the Serbs there and aid to half
a million Serbian refugees, came to mean financial ruin
for Yugoslavia. People's everyday lives were dominated
by the informal economy during the war and crisis years,
ie black jobs and smuggling.
After the peace settlement in 1995, an economic
reform program was presented, but little was done. When
the war in Kosovo broke out in 1998 with new sanctions
from the EU and the US, all opportunities for economic
improvement disappeared. During the NATO bombing war of
1999, large parts of Yugoslavia's infrastructure and
industrial facilities were destroyed.
The sanctions remained as long as Milošević remained
in power. Subsequently, extensive reforms of the economy
began. Important points, besides the privatization of
state-owned companies, were to abolish price controls
and barriers to trade, simplify the tax system and
introduce VAT and a strict monetary policy to achieve
stable prices. Some prices were released in 2001, which
contributed to inflation of 90 percent.
The deficits in the state budget have remained a
problem throughout the 2000s. Among the causes are large
wage increases to government employees, subsidies to
state-owned companies and deficits in health insurance
and pension systems. The global financial crisis, which
hit in the autumn of 2008, doubled the budget deficit,
slowed growth and the Serbian dinar lost value against
the euro. Since both the state and companies and private
individuals had loans in euros, everyone was affected.
In 2009, Serbia received an emergency loan of EUR 3
billion from the IMF to strengthen the foreign exchange
reserve and the value of the dinar.
Although the privatization of business has been
extensive, the restructuring of the manufacturing
industry has not been as rapid. About a quarter of all
employees work in state-owned companies or within state
and municipal government, and subsidies to large, state
and nonprofit companies dig deep holes in the Treasury.
At the beginning of 2013, the state had been forced to
borrow money to pay wages.
The intention was that the remaining state-owned
companies would have been fully or partially privatized
as early as 2009 - a requirement from both the EU (for
membership) and from the IMF - but those that remained
were also the least attractive and thus difficult to get
rid of. Today, there are around 500 often unprofitable
and debt-burdened state companies left to sell (or close
down), such as the pharmaceutical company Galenika,
where in 2016 the state still owned 70 percent. However,
in the summer of 2013, the state had managed to sell 49
percent of the airline JAT (which was also renamed Air
Serbia) to the United Arab Emirates, which has also made
a number of investments in Serbia. However, large
electricity, gas and telecommunications companies remain
in state ownership but have lost, or will lose, their
The World Bank has provided a loan of US $ 100
million to facilitate continued privatization.
The nationalist regime that took office in 2012 has
won elections on promises of hard-fought corruption and
improved living conditions for the population.
Initially, the government also took measures against the
corruption, which it hoped would make foreign investors
more inclined to invest in Serbia, but thereafter they
appear to have recovered somewhat. In its autumn 2016
report on reform activities in Serbia, the European
Commission stresses just how important the fight against
The IMF had canceled its credit program to Serbia in
connection with the fund's failure to approve the 2012
state budget, because it did not contain sufficient
far-reaching reforms. Only at the end of 2014 did the
IMF agree on a new three-year credit program, close to a
billion US dollars.
In 2014, the already strained economy had suffered a
deep recession. In the spring, the country was hit by
the most severe floods in a century, which mainly
affected industries such as mines, energy and
agriculture, while destroying infrastructure. The costs
of the floods amounted to around 1.5 billion euros, or 3
percent of GDP, which decreased by 1.8 percent. Exports,
industrial production and foreign direct investment all
fell and the currency, the dinar, was in free fall
despite the intervention of the Serbian Riksbank. This
meant that government debt was constantly increasing;
since 2008, it had more than doubled. For all Serbs with
housing loans in euros, this meant constantly higher
The new credit program with the IMF brought a light
to the dark, but at the same time required Serbia to
reduce the budget deficit and government debt and create
new jobs, mainly to keep all well-educated young people
in Serbia. As part of the tangible austerity measures
that are noticeable to the country, and not least to
households, Serbia began in November 2014 to cut the
salaries and pensions of public servants as well as the
contributions to debt-burdened government companies. The
reforms, together with increased exports and low oil
prices, have led to a slight upturn in the economy.
Today, the dinar is relatively stable, inflation
historically low, interest rates have been lowered and
investment has increased.
FACTS - FINANCE
GDP per person
US $ 7,234 (2018)
US $ 50,508 million (2018)
4.3 percent (2018)
Agriculture's share of GDP
6.2 percent (2018)
Manufacturing industry's share of GDP
15.0 percent (2004)
The service sector's share of GDP
51.0 percent (2018)
2.2 percent (2019)
Government debt's share of GDP
54.5 percent (2018)
US $ 34 549 M (2017)
US $ 17 986 million (2018)
US $ 24 158 million (2018)
- US $ 2,630 million (2018)
Commodity trade's share of GDP
89 percent (2018)
Main export goods
iron and steel, rubber, clothing, wheat, fruits and
vegetables, metals, electrical appliances, weapons and
Largest trading partner
Germany, Italy, Russia