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Serbia

Serbia bridges East and West
Its treasured position in the heart of South East Europe makes it an outstanding investment location.

Total area: 77,474 sq. Km (roughly the size of the Czech Republic/ Nebraska); 88,361 sq. Km incl. the disputed Kosovo area
Population: 7 million; 8.8 including Kosovo
Government type: Parliamentary republic
Administrative division: Excluding Kosovo: 138 municipalities (opštine) and 23 cities (gradovi). Apart from municipalities, there are also 24 districts (okruzi), with the City of Belgrade constituting an additional district. Serbia has two autonomous provinces (autonomne pokrajine): Vojvodina in the north and claims Kosovo and Metohija in the south.
Capital + other major cities: Belgrade (1.3 million) + Novi Sad (306,000), Nis (182,000), Kragujevac (146,000), Subotica (94,000)
Currency: Serbian dinars (RSD)
Languages: Serbian (official) 88.1%, Hungarian 3.4%, Bosnian 1.9%, Romany 1.4%, other 3.4%, undeclared or unknown 1.8%
Ethnicity: Excl. Kosovo: Serb 80.7%, Hungarian 2.8%, Romany 2.0%, Bosniak 2.3%, other 5.7%, undeclared or unknown 3.4%, in Kosovo 93% are Albanian
Religion: Excl. Kosovo: Serbian Orthodox 84.6%, Catholic 5%, Muslim 3.1%, Protestant 1%, atheist 1.1%, other 0.8%, undeclared or unknown 4.5%; in Kosovo 95.6% of population is Muslim
President: (Mr.) Aleksandar VUCIĆ (since 31 May 2017)
Prime Minister: (Mr.) Miloš VUČEVIĆ (since 2 May 2024)
Date of EU accession: Official candidate country since March 2012

KEY FEATURES

  • 2nd largest market in South East Europe
  • Major European corridors’ intersection point
  • Unique in having duty-free access to both the EU (as a non-member) and to several former Soviet Republics; outside the Commonwealth of Independent States, Serbia is the only country with a Free Trade Agreement with Russia
  • Started EU membership negotiations in January 2014 with the perspective of joining by 2025
  • In 2008, The Republic of Kosovo declared its independence from Serbia in 2008, a move that Serbia rejects
  • Relations between Kosovo and Serbia remain a source of tension in the Western Balkans

MACROECONOMIC OVERVIEW

Located in the heart of South Eastern Europe, at the doorstep of the European Union, Serbia lies on a traditional road that has for centuries connected Europe with the Middle East. While the Serbian economy suffered from isolation during the 1990s, the past twenty years of political and macroeconomic stability have rapidly transformed Serbia into an attractive business environment in Southeast Europe. Serbia’s transitional economy relies on manufacturing and exports, driven largely by foreign investment. The state sector remains robust and much-needed structural economic reforms are still needed, which are also a condition for EU membership.

Serbia has managed to significantly reduce its unemployment rate, but it still remains well above the EU average. The standard of living of the Serbian population remains considerably lower than the average standard of living in the EU and the informal sector of the country is consistent. However, the authorities have the support of the EU and international financial institutions to modernize their infrastructure and support investment in the business community.

Serbia proved to be macroeconomically resilient during the Covid pandemic with an overall decline in GDP growth of only 0.9%. While the service sector was hit significantly, industrial production, on the contrary, grew by 0.2% during this period. Consumption is the main driver of GDP growth, whereas the negative balance of trade contributes negatively.

Selected economic indicators, Serbia, 2016 - 2022

    2016 2017 2018 2019 2020 2021 2022
GDP
 
 
 
 
 
 
 
 
Real GDP growth
%
3.3 2.1 4.5 4.3 -0.9 7.5 2.3p
GDP at current prices
€ bn
36.72 39.18 42.86 46.0 46.79 53.33 60.37p
Foreign trade
 
 
 
 
 
 
 
 
Exports
€ bn
17.85 19.8 21.76 23.85 22.57 29.0p 38.31
Imports
€ bn
19.62 22.39 25.41 27.87 26.45 33.18p 44.77
Balance
€ bn
-1.77 -2.58 -3.65 -4.02 -3.87 -4.18p -6.45
Prices
 
 
 
 
 
 
 
 
CPI – average inflation rate
%
1.1 3.1 2.0 1.9 1.6 4.1 12.0
PPI – industry – average
%
0.0 3.3 2.4 0.7 -1.7 9.0 17.0
Employment
 
 
 
 
 
 
 
 
Registered unemployment
%
16.5 14.6 13.8 11.3 9.8 11.1 9.4
Average monthly gross wage
539 560 583 705 707 774 881
Exchange rates*
 
 
 
 
 
 
 
 
USD/RSD average (RSD per USD)
 
111.29 107.49 100.18 105.25 103.16 99.39 111.66
Currency board fixed rate: EUR/RSD
 
123.11 121.33 118.27 117.85 117.57 117.57 117.45

Source: Statistical Office of the Republic of Serbia, National Bank of Serbia, IMF, Eurostat, 2016-2022
* For the current exchange rate, please see www.xe.com

KEY SECTORS

Serbian industry today represents a diversified mix of focus on agriculturally fruitful land and experience in the manufacturing industry. Traditionally based on cooperation with Western European companies, key sectors in Serbia are base metal, food, electronics, clothing, pharmaceutical and automotive industry.

Serbia is the leading exporter of food and agricultural products in the Balkan region. Agriculture accounts for 6.3% of GDP output and employs 16% of the workforce. Unlike other countries where the food business is controlled by a few big industrial groups, Serbia’s food industry is dominated by many small companies. Serbia supplies the EU market and Russia with fresh, frozen and preserved fruit and vegetables, spirits, confectionery products and meat products. Serbia is the largest provider of frozen fruit to the French and German markets and the sector is one of the few recording a trade surplus.

Automotive industry

Accounts for almost 10% of the entire FDI stock in Serbia since 2001. Around 60 international investors have invested over EUR 1.7 billion in the sector, creating more than 27,000 jobs. The Serbian automotive industry supplies almost all major European and some Asian car manufacturers. The manufacturing of vehicle chassis system parts, especially tires and suspension parts is the most prominent activity in the industry, followed by electrical system components. Stellantis is the major passenger car manufacturer in the country.

Metal-processing and machine-building industry

one of Serbia’s core industries with the longest manufacturing tradition and accounts for 20% of Serbian exports. Large companies dominate the first part of the value chain, with significant economies of scale (production of primary metals, primary processing of metals), while the companies operating in the processing and manufacture of metal products subsectors are more specialized and customer-oriented SMEs. Serbia has significant quantities of coal, lead, zinc, copper and gold, but the lack of investment, which has affected the mining sector for several years, prevents the country's economy from benefiting from this wealth at the moment. The situation has, however, the potential for improvement, as major foreign players are beginning to seek future projects and investments in the field of minerals, such as the planned implementation of The Lithium Project in Jadar, which was temporarily suspended in 2022 due to concerns about the negative environmental impact.

ICT

Shoulder to shoulder with food, production and automotive sector, ICT is becoming one of the pillars of the Serbian economy. A large number of Serbian ICT companies offer very strong technical skills that have attracted partnerships with international firms and won them a place in high-value market niches. Serbia is home to 1,600 innovative IT Companies employing more than 14,000 people and houses Microsoft’s 4th world development centre.

FOREIGN DIRECT INVESTMENT (FDI)

Since 2000, Serbia has attracted over $40 billion in foreign direct investment (FDI). Blue-chip corporations making investments include Fiat Chrysler Automobiles, Siemens, Bosch, Philip Morris, Michelin, Coca-Cola, Carlsberg and others. In the energy sector, Russian energy giants, Gazprom and Lukoil have made large investments. In the metallurgy sector, Chinese steel and copper giants, Hesteel and Zijin Mining have acquired key complexes.

EXPORTS & IMPORTS

The Serbian economy suffers from a constant trade deficit which is the reason why the Serbian government strongly supports further industrial development of the country, especially in export-oriented sectors and with a focus on automotive, electronics and ICT industries. The openness to international trade is low and hovers around 50%. Two-thirds of export is destined for the EU market. The country benefits from sectoral and geographical diversification of exports.

2022 export and import data:

Main import partners:
China – 12.1%
Germany – 11.4%
Russian Federation – 7.5%
Italy – 6.6%
Hungary – 5.6%

 Main export partners:
Germany – 13.7%
Bosnia Herzegovina – 7.5%
Italy – 7.2%
Hungary – 5.4%
Romania – 4.4%
Croatia – 4.2%

Market Research in Serbia

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