Serbia’s GDP in terms of purchasing power in 2021 will be around 44% of the European average. However, a more precise indicator for a comparative insight into how people live in Serbia is “actual individual consumption per household member.” According to this indicator, Serbia should be at around 53% of the European average this year.
Estimates by the Serbian government indicate that gross domestic product (GDP) will amount to 7,374 euros per capita this year, or 8,864 US dollars per capita. Based on the same projection, and taking into account that prices in Serbia in 2020 were on average twice lower than those in the European Union (more precisely at 51.2% of the EU average), GDP by purchasing power will amount to 14,180 euros or just over 17 a thousand dollars. Since Serbia’s GDP will grow twice as fast as in the EU, Serbia will roughly “climb” by one percentage point, and its GDP in terms of purchasing power (of course per capita) will be about 44% of the European average in 2021.
Converted into current euros, the actual individual consumption will amount to 17,148 euros (or 20.6 thousand dollars). Of the countries in the region, compared to Serbia, in 2020 Albania (40%), Bosnia and Herzegovina (43%), Northern Macedonia (44%) lagged behind, while Bulgarians are still the poorest in the EU (61% of the EU average) .
Actual individual consumption
Since Serbia continues to underestimate the real economic result due to the calculation of GDP, e.g. on calculating the full amount of the so-called imputed rents, the announced legalization of housing could further raise GDP, by up to 7% (not to be confused, it is just a calculation, so it will not affect the standard of living). Thus, e.g. GDP at market rates this year actually amounted to 9.5 thousand dollars, or about 18 thousand US dollars, taking its equivalent in purchasing power. When we look at the IMF projections for this year, they actually deviate almost from our estimates; only about 1%. Actual individual consumption would then reach around 57% of the EU average. As consumption is a key indicator of the well-being of the population, this indicator is more suitable for describing the material situation in households, especially since it includes, among other things, public financing of education and health services.
Since salaries are about four times lower than the EU average, the question arises as to how this is possible. The answer is simple: the purchasing power of the dinar or the euro is roughly twice as high in our country as in the West (as indicated by EUROSTAT statistics for 2020).
It is indicative that the impact of the pandemic crisis on actual individual household consumption in the EU and Serbia has been significantly mitigated due to dramatically growing government spending (with a welcome fiscal deficit of 8% of Serbian GDP in 2020 and an expected 6% in 2021) flowed towards public goods.
Are consumption stereotypes correct?
The latest data on the consumption structure of EUROSTAT households from 2019 indicate a fairly accurate national stereotypes. For example, fashion-conscious Italians spend twice as much on this purpose as Germans or Swedes. Poorer EU members naturally spend most of their otherwise lower income on food (eg Romania as much as 16% of GDP, Bulgaria, Greece, Latvia, Portugal about 11% of GDP each). Future-minded South Koreans spend more on education than most residents of other countries (about 7% of disposable income). Australians direct a tenth of private consumption to recreation (and only a slightly smaller amount is given by Canadians and Japanese), while in Serbia, almost twice as much of the expenditure for personal consumption of households goes for the same purpose.
In the EU, a lot is spent in restaurants and hotels (as much as 4.6% of GDP), while in India, more than three times less than the otherwise many times lower GDP is spent for that purpose. This information can be easily verified by touring Western Europe, where you will find full inns, unlike the countries of our region, where a family lunch at a restaurant is still a matter of prestige.
On the other hand, economic policy also plays an important role, so mostly private health care, such as in America, takes away a good part of the budget of every household. At the same time, in the European Union, where public health is common, only 2.3% of GDP goes to that expenditure. In Russia, where housing and heating are largely subsidized, life is cheaper, which means that the money remains for other things. It is interesting that in cold Russia, as much as 5% of GDP goes to footwear and clothing, while in hot Mexico, that amount is three times lower.
The differences are largely due to the state of the economy. For example, rich countries, such as the United States, naturally spend less of their disposable income on food (less than 7%) than Mexicans or Russians, who provide almost a third of the household budget for this purpose (it should be added that total average consumption is many times lower in these countries). In the United States, of the total annual spending in 2019, which amounted to as much as 63 thousand dollars per capita, over one-eighth went to food (at home only slightly more than outside the home), one-sixth to transportation costs, 3,050 dollars for entertainment, 1,443 dollars to education, and the lion’s share (third) to housing-related costs, such as renting an apartment.
Alcohol and meat
When it comes to alcohol consumption, Lithuanians take the first place with an average of 15 liters per year. They are followed by South Koreans, Czechs, Seychelles, and Germans (with 13.4 liters). Unfortunately, Serbia is highly ranked with 11.1 liters in 29th place out of 189 countries, while e.g. Russia 17th with 11.7 liters), Britain 25th, while at the bottom of the list, as expected, are Islamic countries.
However, since incomes vary greatly between countries, this implies that Serbian households spend a significantly larger share of available money on alcohol (and cigarettes), as much as 27 euros per month or 4.8% of total household expenditures.
By the way, the latest available data on personal consumption of households in our country (for 2019) indicate that it amounted to almost 67 thousand dinars (of which half of the income is from regular employment, and a third from pensions). Expenditures on food and non-alcoholic beverages accounted for as much as a third of all expenditures. 16.5% of household expenditures went for housing, water and electricity, followed by expenditures for transport, clothing and footwear, and recreation and culture (all three with nearly twenty total expenditures each).
When it comes to meat consumption, the first place is taken by rich Americans with close to 98.6 kilograms during 2017. Australians, Argentines and Uruguayans follow, which is expected, having in mind the relatively spacious territory for cattle breeding, and the high living standard of the former. Then there are the Israelis, the Brazilians, the leaders in the number of cows in the world, and the Dutch and New Zealanders. What is a positive surprise is the high position of Serbia, right behind the mentioned countries, with as much as 72.1 kilograms per capita in 2017, even ahead of a country like Canada. At the bottom of the list are mostly poor countries, which is related to the relative high cost of meat, RTS reports.
