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- GDP (PPP):
- $81.1 billion
- 2.5% growth
- 0.0% 5-year compound annual growth
- $11,269 per capita
- Inflation (CPI):
- FDI Inflow:
Serbia’s economic freedom score is 60.0, making its economy the 90th freest in the 2015 Index. Its score is up by 0.6 point from last year, reflecting improvements in five of the 10 economic freedoms, including freedom from corruption, property rights, and monetary freedom, that outweigh a large deterioration in the control of government spending. Serbia is ranked 37th out of 43 countries in the Europe region, and its overall score is below the world and regional averages.
Reaching the “moderately free” category for the first time, Serbia has made substantive institutional improvements in its transition to a more market-driven economy. Over the past five years, its economic freedom has risen by 2.0 points. Gains have occurred in six of the 10 economic freedoms, with investment freedom, freedom from corruption, and monetary freedom highlighting the upward trend.
Serbia’s ongoing transition to a more open and dynamic market economy will continue to require a sustained commitment to deep institutional and structural reforms. Corruption remains widespread, and the judicial system’s lack of independence and transparency continues to undermine the rule of law and investors’ confidence in the economy.
Serbia signed a Stability and Association Agreement with the European Union in 2008 and applied for membership in 2009. Accession talks were contingent on the arrest of wartime leader Ratko Mladic, who was apprehended in May 2011. An agreement between Serbia and Kosovo normalized relations in April 2013. The center-right Progressive Party won the early parliamentary elections in March 2014, making Aleksandar Vucic prime minister. Floods in the Balkans severely affected Serbian infrastructure in 2014 and hampered growth. Vucic continues to reform the budget and move toward an increasingly privatized economy and EU membership. Serbia’s economy has attracted significant investment in manufacturing and services as it has integrated into the international economic system. However, growth remains sluggish, and unemployment is high.
Since 2013, the government has adopted an anti-corruption action plan, prosecuted several high-profile corruption cases, and made progress in combating organized crime and criminal networks, but corruption remains a serious concern. Despite a reform strategy that seeks to improve independence, competence, and efficiency, the courts remain vulnerable to political influence. Enforcement of property rights can be extremely slow.
Serbia’s top individual and corporate income tax rates are 15 percent. Other taxes include a value-added tax and a property tax. The overall tax burden amounts to 36.2 percent of domestic output. Public expenditures equal 49.3 percent of domestic production, and public debt is equivalent to 66 percent of gross domestic product.
Despite some progress, regulatory efficiency is weak. Launching a business takes slightly less than a week on average, but licensing requirements are time-consuming. Labor regulations are relatively flexible but not enforced effectively. To secure a loan from the IMF, the government abolished incentive payments to foreign investors and cut other discretionary subsidies for about 200 loss-making state firms.
The average tariff rate is 5.9 percent, and efforts are being made to reduce trade barriers in order to join the WTO. Legal barriers to international trade and investment have been reduced. Foreign investment generally receives national treatment. Banking is largely stable, although two state-owned banks failed in 2013. Nonperforming loans amount to around 20 percent of total loans.