Growth Strategies for Serbia

by Luca Gori and Nicola Pontara

This article originally appeared on ( We are publishing it with the kind permission of the authors.

As a crucial country for stability in the Western Balkans, Serbia has achieved significant economic success in recent years. The country has the potential to accelerate convergence with the EU and become the regional economic locomotive, but new reforms are needed.

Serbia’s economic successes

In the last ten years, Serbia has restructured its public finances, wagered on industrial production and reduced unemployment, all resulting in a growing living standard. Public debt dropped from 70 per cent to 52 per cent of GDP between 2015 and 2019. The country recorded a budget surplus in 2017 and 2018 and broke even in 2019 (Figure 1). And while these indicators have reversed since 2020 and inflation has risen – due to the impact of the energy crisis and the Russian invasion of Ukraine – Serbia’s macroeconomic fundamentals remain solid.

These results allowed Serbia to face the pandemic with appreciable fiscal reserves, which were used in a timely manner. In 2020 – by virtue of an economic stimulus of 8 per cent of GDP – the country suffered a recession of -0.9 per cent of GDP against an average of -5.7 per cent in the 27 EU countries. On the economic growth front, the country also stood out – since 2014, it has grown faster than the European average (Figure 2).

A simple simulation, however, suggests that if Serbia’s GDP per capita grew at a rate of 2.8 per cent per year (i.e. the average expansion of Serbian GDP per capita between 2010 and 2021), it would converge with the EU’s GDP per capita only in 2074. An average growth rate of 5 per cent, on the other hand, would allow Serbia to close the gap as early as 2043 (Figure 3). How can this be achieved? These are the four policies that would facilitate faster growth, plus our corollary.

Stimulating domestic private investments

The state budget, foreign private investments (which quadrupled between 2010 and 2022) and loans from international financial institutions have driven Serbia’s growth in recent years. Missing from the list are domestic private investments, which have been stagnating since 2012. In this respect, it is necessary to develop the capital market, provide a fair and transparent competition ground for local entrepreneurs and improve governance systems.

Improving human capital

Serbia has made progress in boosting human capital, but still lags behind European indicators on health and education. Meanwhile, as in other European countries, the population is ageing and young talent is emigrating abroad. To meet these challenges, the productivity of the shrinking pool of workers will have to be increased with greater inclusion of young people, women and minorities – all categories whose access to the labour market should be adequately stimulated.

Accelerating regional and European integration

The transport infrastructure and development of trade in Serbia have improved in recent years, but remain far from European standards. Regional integration is imperative to stimulate competition, market development and employment, as well as to accelerate Belgrade’s European perspective. The benefits that Serbia could gain from EU membership are undeniable. The gross national income per capita of Bulgaria and Romania has taken off, compared to that of Serbia, precisely since their joining the European “club” in 2007 (Figure 4).

Leveraging the growth of the ICT market

Serbia has decided to bet on technological innovation and the knowledge economy. This is validated by investments in research centres such as the Bio4 Campus in Belgrade, and by the data on ICT sector’s export, which reached EUR 2.692 billion in 2022, an increase of 45 per cent compared to 2021. The challenge now is to increasingly turn the sector’s solutions and services into a driving force for the overall growth of the country’s economy and society.

Green transition

As one of the most energy-intensive countries in Europe, Serbia now has the opportunity to align with EU energy, environment and climate legislation. Wagering on renewables through auctions open to the private sector could give a further boost to private investments. Carbon pricing would also help reduce greenhouse gas emissions, generate tax revenues and prepare Serbia for the implementation of the Carbon Border Adjustment Mechanism.

The country has the capacity to exploit the untapped potential of its numerous resources. It is time for it to undertake further reforms to boost the competitiveness of its economy and to accelerate its European integration process. The latter remains – as President Aleksandar Vucic has repeatedly stated – the strategic horizon for Serbia’s modernisation.

Figure 1 – public budget balance and public debt, PECO countries and Serbia

Figure 2 – Economic growth rate (%), EU-27, PECO countries and Serbia

Figure 3 – Convergence of GDP per capita levels between Serbia and the EU: different scenarios

Figure 4 – Gross national income per capita (2000-2021): Bulgaria, Romania and Serbia (current US$)


* This article reflects the personal views of the authors and is not attributable to the World Bank, its constituent countries or the Executive Directors representing them, nor is it attributable to the Ministry of Foreign Affairs and International Cooperation of Italy.

Luca Gori is the Italian Ambassador to Serbia. He started his diplomatic career in 1995 and held his first foreign post at the Embassy of Italy in Moscow. In 2018, he took up the post of Deputy Director General for Political and Security Affairs/Central Director for Mediterranean and Middle East Countries and, in 2021, was appointed Deputy Head of Cabinet to the Hon. Minister. Ambassador Gori holds a degree in political science from the University of Florence and is the author of several essays on foreign policy and international relations.


Nicola Pontara is currently head of the World Bank office in Belgrade, Serbia. He joined the World Bank in 2000 through the Young Professionals programme and has occupied various positions in Africa, the Middle East, Asia and South America. Prior to his World Bank experience, Pontara was a Fellow at the Overseas Development Institute based in Maputo, Mozambique. Pontara holds a Doctorate in Economics, Masters in Development Economics and a Bachelor’s Degree in Economics from SOAS, University of London.


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