Serbia records highest GDP growth in Europe – Economic analysis


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Despite the difficult circumstances due to the pandemic, the Republic of Serbia not only shows positive economic indicators, but also registers the highest GDP growth in Europe and ranks first among 38 economies.

The three main macroeconomic variables (along with GDP): industry, exports and imports, and retail trade, show that the Serbian economy is growing even under these adverse circumstances.

The strong export growth is the consequence of a strong increase in exports of manufactured goods (by almost 27%), while the continuation of solid growth will be supported by a further growth in investments in the sectors oriented towards the economy. exports, as well as a recovery in external demand (with the expected success of the vaccination process around the world).

In addition, over the January-May period, industry grew by 10.3% and retail trade by almost 13%.

During the pandemic, the implementation of infrastructure projects continued. The share of state capital investment in GDP increased to 5.4% in 2020 from 4.9% in 2019, while in 2021 it is expected to reach 7% of GDP.

The European Bank for Reconstruction and Development (EBRD) also raised Serbia’s growth forecast for this year to 6%, twice its September 2020 estimate.

The EBRD stresses that domestic economic activity will be strongly supported by additional public spending on health subsidies for wages and one-time payments to pensioners and other categories of the population.

The structure of the economy is specific in Serbia, a large part is made up of activities such as agriculture and the food industry, which have grown during the crisis. However, Serbia has a very small share of tourism in GDP, along with automotive and other industries most affected by the crisis.

In addition, strong anti-crisis measures, mainly fiscal, but also monetary policy which will continue in 2021, as well as relatively moderate anti-epidemiological measures from mid-May 2020 and favorable trade relations have further improved the Serbia’s position.

It can be realistically concluded that Serbia can expect an improvement in economic parameters over the next five years, which will be reflected in the growth of the standard of living; salaries, pensions, etc.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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