In the last five years, from 2014 to 2018, according to data published by the Institute for International Economic Studies in Vienna, the economic growth of Serbia has been higher than only three countries of Central and Eastern Europe: Ukraine, which experienced a decline in the observed period, Belarus, that is stagnating and Russia, which has seen a growth of only half a percentage point per year due to economic sanctions.
Serbia is ahead of them, with an annual growth of just 2% in the last five years.
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A mitigating factor for the country is the implementation during this period of fiscal consolidation, reduction of state expenditure, i.e. wages and pensions, and tax increases.
As an economy less developed than the EU average, Serbia needs faster economic growth than the EU to start, at least, reducing this gap.
Instead, in the last five years, it has had twice as much annual growth as 11 Central and Eastern European (CEE) countries and less (albeit minimal) growth than the average for the euro area and the EU as a whole, which growth rate stands at 2.1% per annum.
Last year Serbia’s economic growth jumped to 4.4%, but this is just 0.1 percentage points above the average of the EEC countries that are also members of the European Union.
In 2018, the EU recorded a growth of 2%. Serbia experiencing faster growth than the European economy is likely to continue this year, with 3.6% growth rate expected for Serbia and 1.3% for the EU.
However, when we compare the living standard in Serbia and the EU average, we can see how long it will Serbia to catch up to the European average.
In particular, in 2018, Serbia’s GDP per capita, taking purchasing power parity into account, was only 39.7% of the EU average.
According to this parameter, the poorest country in Europe is Ukraine, which is only 21% of EU standards. Moldova is slightly better with 22.3% of the average, followed by the countries of the region – Albania at 30.7%, Bosnia and Herzegovina at 31.7%, North Macedonia at 37.5% and then Serbia at 39.7%.
Of the countries of the former Yugoslavia, Croatia recorded the highest annual wage growth of 2.3% and Macedonia of 2.4%. Over the same period, Romania increased its average salary by as much as 9.9% per year, trying to mitigate the emigration problem. Bulgaria also recorded high wage growth of 7.4%, Hungary 6.3% and the Baltic countries between 5.5% and 5.9% per year.
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