After the regime change in October 2000, the transformation and modernization of the Serbian economy and economic policy began with the support of the EU, IMF and other international institutions. Economic legislation was modernized, and foreign trade and the money and foreign exchange markets were liberalized. Administrative prices and wages have been abolished. Most of the banks were sent to bankruptcy and the banking system opened to foreign banks. The privatization of the state-owned enterprises was initiated. The Serbian market was opened to foreign investors. Membership in international and regional trade and economic organizations was renewed or acquired.
According to physicscat, Serbia is a liberal market economy that is struggling to get rid of its historical legacy – political influence in the economy, economic regression and blockade of modernization. The Serbian economy has freed itself from its international isolation and partly recaptured lost markets. Serbia is a member of the World Bank and the IMF, and the WTO admission process is ongoing. At the same time, the country is a member of all important regional economic associations: the Stability Pact for Southeast Europe, CEFTA, SECI, SEECP, ICAO.
Main economic sectors
Broken down by economic sector, the service sector comes first, generating 50% of GDP in 2016; industry and mining follow with around 10% and agriculture with 8.5%.
Industry: Serbian industry is still largely behind in modernization. Technologies are out of date, so products are usually not internationally competitive. A large proportion of industrial companies are still not privatized and are making losses. Industry suffers from outdated infrastructure, transportation and the energy sector. The subsidization of cheap energy, which goes back to the socialist epoch, makes industrial production energy-intensive. The focus of industrial production today is still on heavy industry and food processing. The auto industry is hoping for the successful sale of what was once the largest Yugoslav automaker, Zastava Kragujevac to Fiat on increasing production numbers. In 2015 the share of the Serbian industry in the GDP was 25.8%, in it 20.0% of the employees worked.
Agriculture: Agriculture remains an important sector. 44% of the population live in rural areas, 55% of the area of Serbia can be used for agriculture, the food processing sector remains an important branch of industry. The agricultural Vojvodina was considered to be the “breadbasket of Yugoslavia” during socialist times. Despite this, the productivity of Serbian agriculture has not kept pace with economic development, its share in GDP has more than halved since 2000, when it was 20%. The share in 2015 was 8.5%, but it still made up 19.4% of the workforce. The main fault is an unsteady agricultural policy. It is based on an outdated, inefficient system of agricultural subsidies that dates back to the socialist era.
Service Sector: The service sector is the fastest growing sector, it was responsible for most of the economic growth in the past decade. The largest service center is the financial metropolis and capital Belgrade, where most of the companies from the tertiary sector are based. Other large cities such as Novi Sad and Niš are also important service locations. The most important parts of the service sector in Serbia are trade, transport and logistics (2015 14.6% of GDP), real estate (8.9% of GDP), information and telecommunications 4.4% of GDP) and the financial sector (3, 0% of GDP).
Products
The most important products of the Serbian economy are iron and steel in heavy industry. The food industry mainly sells fruit and vegetables and grains, as well as sugar. Textile products and furniture are other important industrial products. Other important products in the chemical industry are rubber and plastics production. The pharmaceutical industry is another growth sector, it produces generics with high technical standards, the leading company is the traditional Serbian group Galenika.
Tourism is playing a growing role with currently 2.0 million guests and 6.6 million overnight stays annually. Tourist attractions are the numerous national parks and mountains Kopaonik and Zlatibor as well as other natural landscapes. Countless historical cultural monuments offer a market for cultural tourism. City tourism to Belgrade and Novi Sad, especially by young people from the region, has increased significantly in recent years.
Economic indicators
According to the figures, Serbia’s economy had embarked on a consolidation course in the past decade – before the global economic crisis of 2009. The economy grew by an average of 5% between 1999 and 2009, while the export volume grew by an average of 10.3% in the same period. Foreign direct investment reached a total annual volume of around 2 billion euros before the crisis. In 2010, after the crisis, the budget deficit was 4.7% of gross domestic product and thus approached the targets within the EU again. At the beginning of 2012, however, the budget deficit got out of hand again, reaching a worrying 6.0% of GDP in the first quarter of the year. After the gross domestic product slumped to -3.1 percent in 2009, it only recovered slowly in the following years. It was not until 2013 that it recorded significant growth of 3.0 percent. After another slump in 2014, the gross domestic product recovered only slowly in 2015 with growth of only 0.8 percent; In 2016 the gross national product grew significantly by 2.8 percent, in 2017 the growth was 3.0 percent, in 2018 4.5. A further increase in the gross national product of 3.5 percent is forecast for 2019. At the same time, Serbia remains one of the poorest countries in Europe with a net average income of EUR 360 in June 2019. A further increase in the gross national product of 3.5 percent is forecast for 2019. At the same time, Serbia remains one of the poorest countries in Europe with a net average income of EUR 360 in June 2019. A further increase in the gross national product of 3.5 percent is forecast for 2019. At the same time, Serbia remains one of the poorest countries in Europe with a net average income of EUR 360 in June 2019.
A good overview of the Serbian economy is provided by the overview of the AHK, the Foreign Office, the reports of Germany Trade & Invest (GTAI) and the annual Doing Business report of the World Bank.