Serbia has an emerging market economy in upper-middle income range. According to the International Monetary Fund, Serbian nominal GDP in 2018 is officially estimated at $50.651 billion or $7,243 per capita while purchasing power parity GDP stood at $122.759 billion or $17,555 per capita. The economy is dominated by services which accounts for 67.9% of GDP, followed by industry with 26.1% of GDP, and agriculture at 6% of GDP. The official currency of Serbia is Serbian dinar (ISO code: RSD), and the central bank is National Bank of Serbia. The Belgrade Stock Exchange is the only stock exchange in the country, with market capitalisation of $8.65 billion and BELEX15 as the main index representing the 15 most liquid stocks.
The economy has been affected by the global economic crisis. After almost a decade of strong economic growth (average of 4.45% per year), Serbia entered the recession in 2009 with negative growth of −3% and again in 2012 and 2014 with −1% and −1.8%, respectively. As the government was fighting effects of crisis the public debt has more than doubled: from pre-crisis level of just under 30% to about 70% of GDP and trending downwards recently to around 50%. Labour force stands at 3.2 million, with 56% employed in services sector, 28.1% in industry and 15.9% in the agriculture. The average monthly net salary in May 2019 stood at 47,575 dinars or $525. The unemployment remains an acute problem, with rate of 12.7% as of 2018.
In the late 1980s, at the beginning of the process of economic transition from a planned economy to a market economy, Serbia’s economy had a favourable position in comparison to most of the Eastern Bloc countries, but it was gravely impacted by the Yugoslav Wars and UN sanctions and trade embargo during the 1990s. At the same time, the country experienced a serious “brain drain”. After the overthrow of Slobodan Milosevic in 2000, Serbia went through a process of transition to a market-based economy and experienced fast economic growth. During that period, the Serbian economy grew 4-5% annually, average wages quadrupled, and economic and social opportunities dramatically improved. During the Great Recession, Serbia marked a decline in its economy of 3.1% in 2009, and following years of economic stagnation pre-crisis level of GDP was reached only in 2016.
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 metallurgy sector, Chinese steel and copper giants, Hesteel and Zijin Mining have acquired key complexes.
Serbia has an unfavourable trade balance: imports exceed exports by 25%. Serbia’s exports, however, recorded a steady growth in last couple of years reaching $19.2 billion in 2018. The country has free trade agreements with the EFTA and CEFTA, a preferential trade regime with the European Union, a Generalised System of Preferences with the
United States, and individual free trade agreements with Russia, Belarus, Kazakhstan, and Turkey.
Since 2014, country has been in the process of accession negotiations to join the European Union.
The official currency in Serbia is the Serbian dinar and its earliest use dates back to 1214.
Serbia historically had been battling high inflation, especially during the 1980s and 1990s. In 1992 and 1993 it experienced a period of hyperinflation which lasted for a total of 25 months. In 1993, a monthly inflation rate stood at staggering 313 million percent. Since the early 2000s, inflation rate has been stabilized and in the last couple of years a relatively low level of inflation was recorded.
Serbia has a wide-range of free trade agreements with foreign countries and trading blocs.
Serbia signed a free trade agreement with the European Union in 2008 enabling exports of all products originating from Serbia without customs and other fees. For a limited number of products (baby beef, sugar, and wine), annual import quotas remain in effect. As of 2016, the EU countries were the largest trading partners of Serbia with 64.4% of country’s total foreign trade.
Serbia signed the CEFTA enabling exports of all products originating from Serbia without customs and other fees to the neighbouring countries: Albania, Bosnia and Herzegovina, North Macedonia, Moldova, Montenegro and Kosovo. In 2016, the CEFTA countries were the second largest trading partners of Serbia.
Serbia signed a free-trade agreement with EFTA members (Switzerland, Norway, Iceland) in 2009.
The Serbian free-trade agreement with Russia was implemented since 2000; for a limited number of products, annual import quotas remain in effect. Free-trade agreement with Turkey has been implemented since 2010. Trade with the United States is pursued under the Generalized System of Preferences (GSP) with a preferential duty-free entry for approximately 4,650 products.
Attracting foreign direct investments is set as a priority for the government of Serbia, which provides both financial and tax incentives to companies willing to invest. Leading investor nations in Serbia include: Germany, Italy, United States, China, Austria, Norway, and Greece. Majority of FDI went into automotive industry, food and beverage industry, machinery, textile and clothing.
Blue-chip corporations making investments in manufacturing sector include: Fiat Chrysler Automobiles, Bosch, Michelin, Siemens, Panasonic, Continental, Schneider Electric, Philip Morris, LafargeHolcim, Pepsico, Coca-Cola, Carlsberg and others. In the energy sector, Russian energy giants, Lukoil and Gazprom have made large investments. In metallurgy sector, Chinese steel and copper giants, Hesteel and Zijin Mining have acquired steel mill in Smederevo and copper mining complex in Bor, respectively. The financial sector has attracted investments from Italian banks such as Intesa Sanpaolo and UniCredit, Crédit Agricole and Société Générale from France, Erste Bank and Raiffeisen from Austria, among others. ICT and telecommunications saw investments from likes such as Microsoft, Telenor, Telekom Austria, and NCR. In retail sector, biggest foreign investors are Dutch Ahold Delhaize, German Metro AG and Schwarz Gruppe, Greek Veropoulos, and Croatian Fortenova.
Serbia has very favourable natural conditions (land and climate) for varied agricultural production. It has 5,056,000 ha of agricultural land (0.7 ha per capita), out of which 3,294,000 ha is arable land (0.45 ha per capita). In 2016, Serbia exported agricultural and food products worth $3.2 billion, and the export-import ratio was 178%. Agricultural exports constitute more than one-fifth of all Serbia’s sales on the world market. Serbia is one of the largest provider of frozen fruit to the EU (largest to the French market, and 2nd largest to the German market).
Agricultural production is most prominent in Vojvodina on the fertile Pannonian Plain. Other agricultural regions include Macva, Pomoravlje, Tamnava, Rasina, and Jablanica.
In the structure of the agricultural production 70% is from the crop field production, and 30% is from the livestock production. Serbia is world’s second largest producer of plums (582,485 tonnes; second to China), second largest of raspberries (89,602 tonnes, second to Poland), it is also a significant producer of maize (6.48 million tonnes, ranked 32nd in the world) and wheat (2.07 million tonnes, ranked 35th in the world). Other important agricultural products are: sunflower, sugar beet, soybean, potato, apple, pork meat, beef, poultry and dairy.
There are 56,000 ha of vineyards in Serbia, producing about 230 million litres of wine annually. Most famous viticulture regions are located in Vojvodina and Sumadija.
The industry was the economic sector hardest hit by the UN sanctions and trade embargo and NATO bombing during the 1990s and transition to market economy during the 2000s. The industrial output saw dramatic downsizing: in 2013 it was expected to be only a half of that of 1989. Main industrial sectors include: automotive, mining, non-ferrous metals, food-processing, electronics, pharmaceuticals, clothes. Serbia has 14 free economic zones as of September 2017, in which many foreign direct investments are realised.
Automotive industry (with Fiat Chrysler Automobiles as a forbearer) is dominated by cluster located in Kragujevac and its vicinity, and contributes to export with about $2 billion. Country is a leading steel producer in the wider region of Southeast Europe and had production of nearly 2 million tonnes of raw steel in 2018, coming entirely from Smederevo
steel mill, owned by the Chinese Hesteel. Serbia’s mining industry is comparatively strong: Serbia is the 18th largest producer of coal (7th in the Europe) extracted from large deposits in Kolubara and Kostolac basins; it is also world’s 23rd largest (3rd in Europe) producer of copper which is extracted by Zijin Bor Copper, a large copper mining company, acquired by Chinese Zijin Mining in 2018; significant gold extraction is developed around Majdanpek. Serbia notably manufactures intel smartphones named Tesla smartphones.
Food industry is well known both regionally and internationally and is one of the strong points of the economy. Some of the international brand-names established production in Serbia: PepsiCo and Nestlé in food-processing sector; Coca-Cola (Belgrade), Heineken (Novi Sad) and Carlsberg (Backa Palanka) in beverage industry; Nordzucker in sugar industry. Serbia’s electronics industry had its peak in the 1980s and the industry today is only a third of what it was back then, but has witnessed a something of revival in last decade with investments of companies such as Siemens (wind turbines) in Subotica, Panasonic (lighting devices) in Svilajnac, and Gorenje (electrical home appliances) in Valjevo. The pharmaceutical industry in Serbia comprises a dozen manufacturers of generic drugs, of which Hemofarm in Vrsac and Galenika in Belgrade, account for 80% of production volume. Domestic production meets over 60% of the local demand.
The energy sector is one of the largest and most important sectors to the country’s economy. Serbia is a net exporter of electricity and importer of key fuels (such as oil and gas).
Serbia has an abundance of coal, and significant reserves of oil and gas. Serbia’s proven reserves of 5.5 billion tonnes of coal lignite are the 5th largest in the world (second in Europe, after Germany). Coal is found in two large deposits: Kolubara (4 billion tonnes of reserves) and Kostolac (1.5 billion tonnes). Despite being small on a world scale, Serbia’s oil and gas resources (77.4 million tonnes of oil equivalent and 48.1 billion cubic metres, respectively) have a certain regional importance since they are largest in the region of former Yugoslavia as well as the Balkans (excluding Romania). Almost 90% of the discovered oil and gas are to be found in Banat and those oil and gas fields are by size among the largest in the Pannonian basin but are average on a European scale.
The production of electricity in 2015 in Serbia was 36.5 billion kilowatt-hours (KWh), while the final electricity consumption amounted to 35.5 billion kilowatt-hours (KWh). Most of the electricity produced comes from thermal-power plants (72.7% of all electricity) and to a lesser degree from hydroelectric-power plants (27.3%). There are 6 lignite-operated thermal-power plants with an installed power of 3,936 MW; largest of which are 1,502 MW-Nikola Tesla 1 and 1,160 MW-Nikola Tesla 2, both in Obrenovac. Total installed power of 9 hydroelectric-power plants is 2,831 MW, largest of which is Djerdap 1 with capacity of 1,026 MW. In addition to this, there are mazut and gas-operated thermal-power plants with an installed power of 353 MW. The entire production of electricity is concentrated in Elektroprivreda Srbije (EPS), public electric-utility power company.
The current oil production in Serbia amounts to over 1.1 million tonnes of oil equivalent and satisfies some 43% of country’s needs while the rest is imported. National petrol company, Naftna Industrija Srbije (NIS), was acquired in 2008 by Gazprom Neft. The company’s refinery in Pancevo (capacity of 4.8 million tonnes) is one of the most modern oil-refineries in Europe; it also operates network of 334 filling stations in Serbia (74% of domestic market) and additional 36 stations in Bosnia and Herzegovina, 31 in Bulgaria, and 28 in Romania. There are 155 kilometres of crude oil pipelines connecting Pancevo and Novi Sad refineries as a part of trans-national Adria oil pipeline.
Serbia is heavily dependent on foreign sources of natural gas, with only 17% coming from domestic production (totalling 491 million cubic meters in 2012) and the rest is imported, mainly from Russia (via gas pipelines that run through Ukraine and Hungary). Srbijagas, public company, operates the natural gas transportation system which comprise 3,177 kilometres of trunk and regional natural gas pipelines and a 450 million cubic meter underground gas storage facility at Banatski Dvor.
Serbia has a strategic transportation location since the country’s backbone, Morava Valley, represents by far the easiest route of land travel from continental Europe to Asia Minor and the Near East.
Serbian road network carries the bulk of traffic in the country. Total length of roads is 45,419 km of which 962 km are “class-IA state roads” (i.e. motorways); 4,517 km are “class-IB state roads” (national roads); 10,941 km are “class-II state roads” (regional roads) and 23,780 km are “municipal roads”. The road network, except for the most of class-IA roads, are of comparatively lower quality to the Western European standards because of lack of financial resources for their maintenance in the last 20 years.
Over 300 kilometres of new motorways has been constructed in the last decade and additional 142 kilometres are currently under construction: A5 motorway (from south of Pojate (north of Krusevac to Cacak) and 30 km-long segment of A2 (between Cacak and Pozega). Coach transport is very extensive: almost every place in the country is connected by bus, from largest cities to the villages; in addition there are international routes (mainly to countries of Western Europe with large Serb diaspora). Routes, both domestic and international, are served by more than hundred intercity coach services, biggest of which are Lasta and Nis-Ekspres. As of 2018, there were 1,999,771 registered passenger cars or 1 passenger car per 3.5 inhabitants.
Serbia has 3,819 kilometres of rail tracks, of which 1,279 are electrified and 283 kilometres are double-track railroad. The major rail hub is Belgrade (and to a lesser degree Nis), while the most important railroads include: Belgrade–Bar (Montenegro), Belgrade–Sid–Zagreb (Croatia)/Belgrade–Nis–Sofia (Bulgaria) (part of Pan-European Corridor X), Belgrade–Subotica–Budapest (Hungary) and Nis–Thessaloniki (Greece). Although still a major mode of freight transportation, railroads face increasing problems with the maintenance of the infrastructure and lowering speeds. Rail services are operated Srbija Voz (passenger transport) and Srbija Kargo (freight transport).
There are only two airports with regular passenger traffic. Belgrade Nikola Tesla Airport served 5.6 million passengers in 2018 and is a hub of flagship carrier Air Serbia which flies to 59 destinations in 32 countries and carried some 2.5 million passengers in 2018. Nis Constantine the Great Airport is mainly catering low-cost airlines.
Serbia has a developed inland water transport since there are 1,716 kilometres of navigable inland waterways (1,043 km of navigable rivers and 673 km of navigable canals), which are almost all located in northern third of the country. The most important inland waterway is the Danube (part of Pan-European Corridor VII). Other navigable rivers include Sava, Tisza, Begej and Timiş River, all of which connect Serbia with Northern and Western Europe through the Rhine–Main–Danube Canal and North Sea route, to Eastern Europe via the Tisza, Begej and Danube Black Sea routes, and to Southern Europe via the Sava River. More than 2 million tonnes of cargo were transported on Serbian rivers and canals in 2016 while the largest river ports are: Novi Sad, Belgrade, Pancevo, Smederevo, Prahovo and Sabac.
Fixed telephone lines connect 81% of households in Serbia, and with about 9.1 million users the number of cellphones surpasses the total population of by 28%. The largest mobile operator is Telekom Srbija with 4.2 million subscribers, followed by Telenor with 2.8 million users and Vip mobile with about 2 million. Some 58% of households have fixed-line (non-mobile) broadband Internet connection while 67% are provided with pay television services (i.e. 38% cable television, 17% IPTV, and 10% satellite). Digital television transition has been completed in 2015 with DVB-T2 standard for signal transmission.
Serbia is not a mass-tourism destination but nevertheless has a diverse range of touristic products. In 2019, total of over 3.6 million tourists were recorded in accommodations, of which half were foreign. Foreign exchange earnings from tourism were estimated at $1.5 billion.
Tourism is mainly focused on the mountains and spas of the country, which are mostly visited by domestic tourists, as well as Belgrade and, to a lesser degree, Novi Sad, which are preferred choices of foreign tourists (almost two-thirds of all foreign visits are made to these two cities). The most famous mountain resorts are Kopaonik, Stara Planina and Zlatibor. There are also many spas in Serbia, the biggest of which are Vrnjacka Banja, Soko Banja, and Banja Koviljaca. City-break and conference tourism is developed in Belgrade and Novi Sad. Other touristic products that Serbia offer are natural wonders like Djavolja varos, Christian pilgrimage to the many Orthodox monasteries across the country and the river cruising along the Danube. There are several internationally popular music festivals held in Serbia, such as EXIT (with 25–30,000 foreign visitors coming from 60 different countries) and the Guca trumpet festival.