Serbia is an upper middle income service economy in Central Europe, with a tertiary sector that contributes over 70% of GDP (GDP).
In a free market economy, goods and services are exchanged between buyers and sellers without interference from the government. The GDP is expected to reach $62.721 trillion in nominal terms in 2022, which works out to $9,164 per person. In PPP terms, however, the GDP was $164.835 trillion, which worked out to $24,084 per person.
Energy, automobile manufacturing, machinery manufacturing, mining, and agriculture are Serbia’s most robust industries. Automobiles, basic metals, furniture, processed foods, equipment, chemicals, sugar, tires, clothing, and medicines are the country’s principal industrial exports.
Serbia’s GDP is heavily reliant on exports and imports. Main trading partners include Germany, Italy, Russia, China, and neighboring Balkan countries.
Most of Serbia’s main domestic and international corporations, as well as the National Bank of Serbia and the Belgrade Stock Exchange, are headquartered in Belgrade, the country’s capital and economic hub. When considering economic significance, Novi Sad and Ni are second and third to Belgrade, respectively.
Serbia Economy In Europe 2023 [Facts & History]
Annual GDP growth in Serbia was 0.28% in the decades before World War I. As a result, the economic gap between Serbia and Western Europe widened, as its growth rate lagged behind that of northwestern Europe. In the years before World War One, Serbia’s mostly agricultural industry experienced rapid expansion. But the manufacturing and service economies remained negligible.
Serbia’s economy was in a better position than most of the Eastern Bloc countries in the late 1980s, at the start of the transition from a planned economy to a market economy, but it suffered greatly during the 1990s due to poor economic decision-making, the Yugoslav Wars, and UN sanctions and trade embargo.
Additionally, there was a significant “brain drain” from the country during this time. A severe recession set in, and it didn’t end until 1999.
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Serbia’s rapid economic growth after Slobodan Milosevic’s ouster in 2000 can be attributed in large part to the country’s successful transition to a market-based economy. During that time, the economy of Serbia increased by an average of 4-5 percent per year, wages doubled, and new doors opened up in all areas of life.
Serbia’s economy shrank by 3.1% in 2009 during the Great Recession, and after years of stagnation, the country’s GDP finally caught up to its level before the crisis in 2016.
Serbia External Trade
Serbia has numerous FTAs with different nations and groups of nations. In 2008, Serbia and the European Union negotiated a free trade agreement that removes tariffs and other trade barriers for Serbian exports to the EU.
There are still annual import quotas in place, but only for a select few products (baby beef, sugar, and wine). As of 2016, 64.4% of Serbia’s total international commerce was with countries within the EU.
By joining the CEFTA, Serbia is able to ship its goods to Albania, Bosnia and Herzegovina, North Macedonia, Moldova, Montenegro, and Kosovo without paying customs or other export costs. Serbia’s second major trading partners in 2016 were the countries of CEFTA.
In 2009, Serbia established a free-trade pact with the European Free Trade Association (EFTA) countries of Switzerland, Norway, and Iceland. Since 2000, the Serbian government has enforced the terms of a free-trade agreement with Russia. However, annual import limitations for a small number of products still apply. Implementation of the free trade agreement with Turkey began in 2010. Under the Generalized System of Preferences (GSP), roughly 4,650 products are eligible for duty-free entry into the United States, facilitating trade with the country.