Between 2019 and 2025, Serbia’s economic and trade relations with the European Union grew in scale but stagnated in substance. The EU remains Serbia’s main trading partner, investor, and donor, yet mutual political trust has eroded. Serbia continues to balance between economic pragmatism and political independence, while the EU hesitates between enlargement and internal challenges, resulting in economic integration without political alignment.
The EU accounts for around 65% of Serbia’s foreign trade, mainly with Germany, Italy, Romania, and Hungary. Over 70% of foreign direct investment in Serbia comes from EU countries, mostly in low-value, labor-intensive sectors supported by domestic subsidies. This model sustains GDP growth but reinforces dependence on cheap labor and foreign capital. Technology transfer and innovation remain limited.
Experts note that the partnership is transactional rather than strategic. Professor Boris Kršev argues Serbia offers the EU natural resources and low-cost labor but lacks high-value industries. He adds that foreign investors tend to withdraw profits quickly, while few bring advanced technology or long-term development potential.
The EU’s emphasis on rule of law and anti-corruption is often contradicted by its own business interests in Serbia. European companies benefit from flexible regulations and state-backed guarantees, while Brussels tolerates political ambiguities in exchange for regional stability. Serbia, in turn, uses EU funds and investments to maintain its political narrative of independence.
From 2019 to 2025, Serbia received over €1.6 billion from EU pre-accession funds (IPA II and III), aimed at public administration reform, infrastructure, and digitalization. However, transparency and measurable results remain limited. The EU continues to invest heavily but without ensuring political or institutional reform.
The COVID-19 pandemic further strained relations. While China and Russia were quick to provide medical aid, the EU’s delayed response damaged its image, despite later becoming Serbia’s largest donor of vaccines and medical support.
Energy remains the deepest point of divergence. Serbia maintained its gas deal with Russia after 2022, seeking to combine cheap energy with EU investment in renewables. The EU viewed this as strategic defiance, while Serbia framed it as pragmatic neutrality. Energy experts argue Serbia must now decide whether to align with EU energy partners or remain dependent on Russia.
Foreign investment from EU countries, especially Germany, Austria, and Italy, is often portrayed as proof of Serbia’s economic stability. Yet most investments rely on high subsidies and create low-wage jobs. Profits are repatriated, and domestic industry remains underdeveloped.
Key future cooperation areas include digital economy, renewable energy, green technologies, and critical raw materials. However, Serbia’s slow reform pace, administrative barriers, and inconsistent environmental policies hinder progress. The EU’s cautious stance and tolerance of slow reforms further weaken the process.
Meanwhile, China’s growing presence through loans and infrastructure projects offers quick results but increases debt and reduces transparency. This competition between East and West leaves Serbia economically integrated with Europe but politically aligned elsewhere.
Ultimately, Serbia’s cooperation with the EU is successful in figures but fragile in trust. Trade and investment continue to grow, but genuine integration is stalled. Serbia relies on EU capital and legitimacy, while the EU uses Serbia as proof of its influence in the Balkans. Without deeper institutional reform, transparency, and political commitment, Serbia will remain economically part of Europe but politically outside it.
