Over the past 25 years, Serbia’s gross domestic product (GDP) has grown by more than 130%, but this growth has been far from consistent. While the country saw dynamic progress up until 2012, the subsequent decade has witnessed a notable slowdown. What factors have contributed to this deceleration? Were the measures of fiscal consolidation and the COVID-19 pandemic responsible, or was it a flawed development strategy?
Serbia’s GDP in the last quarter-century, including forecasts for 2025, has grown by 130.8%. However, neighboring countries like Albania and Romania have achieved higher relative growth during this period, placing Serbia 86th globally in terms of GDP growth, according to the International Monetary Fund (IMF) and calculations by economist Miroslav Zdravković.
Zdravković divided this 25-year period into two phases—2000 to 2012 and 2013 to 2025—which coincides with a change in government. During the first phase, Serbia achieved 60.3% growth, while other countries in the region, such as Albania, Romania, and Bulgaria, experienced faster relative growth. In contrast, the second phase saw a slowdown. Zdravković attributes this to fiscal consolidation measures, which resulted in a mere 13.7% GDP growth between 2013 and 2018.
The pandemic-induced lockdown further strained the economy in 2020, contributing to a 17.5% GDP increase in the eight years following 2012. Looking ahead, the GDP is expected to grow by just 44% over the next 13 years, a rate significantly lower than the 60.3% growth seen during the previous 12 years. Despite this, Serbia’s ranking in terms of relative economic growth will remain around the 80th position globally, similar to its status in the first phase of observation.
Zdravković notes that the slowdown is not unique to Serbia—many countries experienced a downturn in 2020, including neighboring Kosovo, Romania, Montenegro, and Albania, which all saw higher relative growth than Serbia. Meanwhile, Bosnia and Herzegovina (BiH) and Croatia’s growth rates are similar to Serbia’s.
In contrast, countries like Guyana, Ethiopia, and China saw the highest relative GDP growth, with their GDP increasing by nearly seven to eleven times, while Venezuela, Yemen, Puerto Rico, and Sudan experienced the largest declines.
Danilo Šuković, an economist, explains that Serbia’s rapid growth during the first 12 years was largely due to the low baseline left by the economic devastation of the 1990s, marked by wars, hyperinflation, and sanctions. However, the 2008 financial crisis halted this momentum, and Šuković argues that the slower growth after 2012 stems from an unsustainable economic policy. A fixed exchange rate policy, according to Šuković, has harmed the export sector, and foreign direct investments have stagnated, with many investors only benefiting from subsidies and not reinvesting in Serbia.
Šuković also criticizes fiscal consolidation, arguing that it was not necessary to reduce salaries and pensions under the guise of preventing bankruptcy. According to him, this approach harmed citizens and has been presented as a success when, in fact, it was a failure.
Furthermore, Šuković points out that Serbia remains one of the poorest countries in Europe, despite the reported GDP growth. He argues that the focus on GDP growth obscures the real picture of economic hardship for many citizens, who face rising prices despite the growth statistics.
Professor Veroljub Dugalić from the Faculty of Economics in Kragujevac also offers a critical view. He suggests that comparing Serbia’s growth to a low baseline from the 1990s can skew results, and that inflation and exchange rate policies have further distorted the growth figures. Dugalić emphasizes that real growth should be measured by the purchasing power of the citizens, pointing out that despite reported economic growth, the cost of living has increased significantly.
Dugalić warns that statistics can be manipulated to suit specific agendas, urging people to focus on real-life experiences, such as how much more they pay for goods and services today compared to a decade ago, rather than relying solely on abstract growth numbers.
In conclusion, while Serbia has made progress in its GDP over the last 25 years, the growth trajectory has not been steady. A mix of external challenges, fiscal policies, and the pandemic have contributed to a slowdown, and there is growing concern about the sustainability of this growth and its real impact on the average citizen.
