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  • Country Context

    Population, million6.9
    GDP, current US$ billion53
    GDP per capita, current US$7,673
    School Enrollment, primary (% gross, 2019)99.6
    Life Expectancy at Birth, years (2018)75.9

    After robust growth of 4.2 percent in 2019, the COVID-19 pandemic caused a recession of -1 percent in 2020. This is a significantly better result than what was previously projected (a drop of 3 percent). Services sectors were hit the most by the pandemic-related events (down 1.5 percent, year-on-year), while value added in industry remained flat in real terms and the agriculture sector grew by 4.9 percent. On the expenditure side, both investment and consumption had a negative contribution to growth in 2020 (-1.1 and -0.7 percentage points, respectively), while net exports had a positive contribution (0.8 percentage points). 

    The large fiscal stimulus program of close to 13 percent of GDP helped to keep the recession mild. It consisted of tax deferrals, increased expenditures of around 8 percent of GDP, and guarantees in the amount of 4.8 percent of GDP. As the largest part of the package (7.4 percent of GDP) went to businesses, a major reduction in employment was avoided. In fact, registered employment increased by 1.9 percent compared to 2019. The third quarter unemployment rate, as measured by the Labor Force Survey, stood at 9 percent in 2020, slightly lower than 2019. The wage subsidy and cash support to citizens also helped to avert a spike in poverty, although at a significant fiscal cost. Due to the support package, limited labor market impacts, and growth in agriculture, poverty (income under US$5.5/day in revised 2011 purchasing power parity) is estimated to have remained nearly stagnant at 17.4 percent in 2020 compared to 17.3 percent in 2019.

    The fiscal deficit increased significantly in 2020 and reached an estimated 8.1 percent of GDP, primarily due to the large fiscal stimulus program. Public debt is estimated to be 58.2 percent of GDP at end-2020.

    The new government formed in October 2020 (following June 2020 elections) continues to implement programs that address structural weaknesses, increase public sector efficiency, and eliminate bottlenecks to private sector growth, along with maintaining macroeconomic stability. An important aspect will be the introduction of a “green growth” program to its post-COVID-19 economic recovery efforts while responding to challenges that include a shrinking population, labor shortages, and climate change. Serbia’s continued growth will crucially depend on the pace of the European Union (EU) accession process. 

    Last Updated: Apr 07, 2021

  • Strategy

    Number of Active Projects12
    IBRD Lending (incl. US$120 million for two regional projects)US$939 million
    EU Trust Funds3 (€7.9 million)

    The World Bank Group’s (WBG) engagement in Serbia is guided by the February 2019 Performance and Learning Review (PLR). This reaffirmed the overarching goal of the FY16–20 Country Partnership Framework (CPF) to support the creation of a competitive and inclusive economy in Serbia and through this, achieve the country’s integration into the EU. The PLR was adjusted in response to the COVID-19 pandemic, and the CPF was extended for a year. 

    Key areas of WBG support in Serbia include: 

    • restoring fiscal and macroeconomic stability
    • creating conditions for accelerated private sector growth and job creation
    • improving infrastructure
    • strengthening public sector management and improving public service delivery to citizens
    • as a cross-cutting theme, responding to climate change and disaster risks

    A Systematic Country Diagnostic Update, completed in April 2020, underscored environmental sustainability and governance as critical to Serbia’s shared prosperity, challenges that have been highlighted by the impact of the pandemic.

    The active portfolio reflects these priorities through 12 projects in real estate management, the business environment, competitiveness and jobs, innovative entrepreneurship, health, agriculture, transport, disaster risk management, financial sector reform, public sector modernization (including the digitalization of selected public services and the modernization of tax administration), and early childhood education, as well as two regional projects aimed at facilitating trade and transport in the Western Balkans and connectivity on the Drina and Sava river corridors.

    Key Engagement
    The WBG has engaged in a multi-faceted effort to address Serbia’s complex legacy reforms, including commercial reform of state-owned enterprises, financial consolidation in public utilities and public transport companies, and more efficient core public administration.

    More than four years of intensive dialogue and technical advice, combined with policy-based and results-based lending, have started to yield important and increasingly impressive results in several sectors.  

    Key operations have included the Public Enterprise and Public Utilities Development Policy Loan (DPL) series, the Competitiveness and Jobs Project, the Program for Results in support of Public Administration Modernization and Optimization, the State-Owned Financial Institutions Reform Project, the Program for Results in support of Enhancing Infrastructure Efficiency and Sustainability, and the Emergency COVID-19 Response Project in response to the outbreak of COVID-19. In FY21, the Railways Sector Modernization Multiphase Programmatic Approach was added, and the Public Sector Efficiency and Green Recovery DPL is to be considered by the Board on April 29. 

    As a result of these efforts, public utilities, for example, are returning to financial health with gradually improving services, and local scientists are linking to enterprises to commercialize their innovations, thus contributing to growth and jobs.  

    Next generation reforms are focused on developing a new growth agenda and deepening public sector reforms to promote a post-COVID-19 green recovery and lay the foundations for Serbia’s alignment with the EU Green Deal and progress toward EU accession.  

    Last Updated: Apr 07, 2021

  • Recent Economic Developments

    After two years of over 4 percent growth, the Serbian economy entered a recession in 2020 caused by the COVID-19 pandemic. The year began well—GDP in the first quarter was up by 5.2 percent—but growth turned negative in the remainder of the year, as lockdowns introduced to control the spread of COVID took a toll on the economy. Preliminary estimates suggest that GDP fell by 1 percent in 2020 in real terms. The recession could have been deeper if not for the timely and sizable government stimulus package of nearly 13 percent of GDP (of which 4.8 percent of GDP was in the form of loan guarantees and 8 percent of GDP in different revenue and expenditure measures).

    The labor market was resilient to the shock caused by the pandemic. The average unemployment rate in 2020 stood at 9 percent (based on the Labor Force Survey), while the employment rate was 49.1 percent. Pandemic-related shocks to the economy mainly affected informal employees, as the number of informally employed declined by 55,500 in 2020. 

    The widening deficit led to a rise in the gross financing requirement, which was met through the issuance of Eurobonds and solid activity in the domestic debt market, as well as a number of international bilateral loans. Public debt, which had fallen steadily in 2015–19 to an eight year low of 52.9 percent, stood at 58.2 percent of GDP at the end of December 2020.

    Economic Outlook

    Recovery from the COVID-19-related recession is expected to start in 2021. Growth will be supported by a recently announced new package of measures to support citizens and the economy amounting to 5.1 percent of GDP. As a result, the economy is expected to rebound by 5 percent in 2021.

    Over the medium term, growth is expected to be around 4 percent, driven by consumption, and investment will recover only slowly, which may also slow the impact of growth on labor markets (both employment and wages). This medium-term outlook crucially depends on international developments (including the control of COVID-19), the pace of structural reforms, and political developments. 

    Immediate focus is needed on measures to improve the business environment and governance in order to lower the cost of doing business and ensure security and safety, as well as efforts to improve the quality of infrastructure. Regarding the medium- to long-term challenges, the focus should be on demography and climate change. First, an aging and shrinking population will leave Serbia with a smaller available labor force. Labor shortages, combined with skills mismatches, could significantly hurt the competitiveness of the Serbian economy. Second, the impact of climate change, including more frequent and severe droughts and floods, will hit agriculture and food production hard and make the cost of infrastructure maintenance much higher. 

    The pace of labor market recovery will be critical to resumed poverty reduction. The new package is expected to support citizens and economic recovery, though poor and vulnerable households, who tend to depend more on self-employment and less secure jobs, may take longer to regain their income level. Poverty is projected to slowly decline to 16.8 percent in 2021.

    In the medium term, regional disputes and slow progress in the EU accession process could affect investment sentiment and therefore delay investment projects in infrastructure and other sectors. Labor market challenges limit the scope for robust welfare improvements and could be exacerbated by a significant brain drain. 

    Last Updated: Apr 07, 2021



Serbia: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments



Additional Resources

Country Office Contacts

Belgrade, Serbia
Bulevar Kralja Aleksandra 86
11000 Belgrade, Serbia
+381 11 30 23 700