Serbia’s economic growth has slowed due to weak domestic production, limited investment, labor outflow, a fixed exchange rate, and the economic slowdown of its key trading partners. This has negatively affected the country’s GDP growth and contributed to a decline in foreign direct investments (FDI), tourism revenue and remittances—all of which are putting pressure on the exchange rate.
Remittances, a critical income source for many households, have fallen noticeably. In the first quarter of this year, inflows amounted to €809 million, compared to €883 million in the same period last year and €905 million in 2023. Economists attribute this trend to the economic stagnation in the European Union, particularly in Germany, where a large number of Serbian workers reside.
Lazar Ivanović from the Center for Advanced Economic Studies (CEVES) argues that the decline in FDI and remittances reflects both external challenges and flaws in Serbia’s chosen economic model. This model, he says, fosters dependence on external capital inflows that artificially strengthen the dinar, ultimately harming export competitiveness.
Ivanović notes that addressing remittance-related issues requires long-term planning and should not be reduced to short-term political considerations. Meanwhile, concerns are rising that ongoing economic instability in the EU, coupled with rising unemployment, may push some Serbian citizens to return home.
Professor Goran Radosavljević from FEFA highlights a new trend: people who have returned to Serbia are increasingly sending money back to their countries of origin. He also points out that as older generations abroad pass away and families relocate permanently, remittance inflows will naturally decline. This, combined with growing imports and weaker exports, could further strain Serbia’s balance of payments and increase the need for foreign borrowing.
