Home

Serbia vs. Montenegro

Economy

SerbiaMontenegro
Economy - overview

Serbia has a transitional economy largely dominated by market forces, but the state sector remains significant in certain areas. The economy relies on manufacturing and exports, driven largely by foreign investment. MILOSEVIC-era mismanagement of the economy, an extended period of international economic sanctions, civil war, and the damage to Yugoslavia's infrastructure and industry during the NATO airstrikes in 1999 left the economy worse off than it was in 1990. In 2015, Serbia's GDP was 27.5% below where it was in 1989.

After former Federal Yugoslav President MILOSEVIC was ousted in September 2000, the Democratic Opposition of Serbia (DOS) coalition government implemented stabilization measures and embarked on a market reform program. Serbia renewed its membership in the IMF in December 2000 and rejoined the World Bank and the European Bank for Reconstruction and Development. Serbia has made progress in trade liberalization and enterprise restructuring and privatization, but many large enterprises - including the power utilities, telecommunications company, natural gas company, and others - remain state-owned. Serbia has made some progress towards EU membership, gaining candidate status in March 2012. In January 2014, Serbia's EU accession talks officially opened and, as of December 2017, Serbia had opened 12 negotiating chapters including one on foreign trade. Serbia's negotiations with the WTO are advanced, with the country's complete ban on the trade and cultivation of agricultural biotechnology products representing the primary remaining obstacle to accession. Serbia maintains a three-year Stand-by Arrangement with the IMF worth approximately $1.3 billion that is scheduled to end in February 2018. The government has shown progress implementing economic reforms, such as fiscal consolidation, privatization, and reducing public spending.

Unemployment in Serbia, while relatively low (16% in 2017) compared with its Balkan neighbors, remains significantly above the European average. Serbia is slowly implementing structural economic reforms needed to ensure the country's long-term prosperity. Serbia reduced its budget deficit to 1.7% of GDP and its public debt to 71% of GDP in 2017. Public debt had more than doubled between 2008 and 2015. Serbia's concerns about inflation and exchange-rate stability preclude the use of expansionary monetary policy.

Major economic challenges ahead include: stagnant household incomes; the need for private sector job creation; structural reforms of state-owned companies; strategic public sector reforms; and the need for new foreign direct investment. Other serious longer-term challenges include an inefficient judicial system, high levels of corruption, and an aging population. Factors favorable to Serbia's economic growth include the economic reforms it is undergoing as part of its EU accession process and IMF agreement, its strategic location, a relatively inexpensive and skilled labor force, and free trade agreements with the EU, Russia, Turkey, and countries that are members of the Central European Free Trade Agreement.

Montenegro's economy is transitioning to a market system. Around 90% of Montenegrin state-owned companies have been privatized, including 100% of banking, telecommunications, and oil distribution. Tourism, which accounts for more than 20% of Montenegro's GDP, brings in three times as many visitors as Montenegro's total population every year. Several new luxury tourism complexes are in various stages of development along the coast, and a number are being offered in connection with nearby boating and yachting facilities. In addition to tourism, energy and agriculture are considered two distinct pillars of the economy. Only 20% of Montenegro's hydropower potential is utilized. Montenegro plans to become a net energy exporter, and the construction of an underwater cable to Italy, which will be completed by the end of 2018, will help meet its goal.

Montenegro uses the euro as its domestic currency, though it is not an official member of the euro zone. In January 2007, Montenegro joined the World Bank and IMF, and in December 2011, the WTO. Montenegro began negotiations to join the EU in 2012, having met the conditions set down by the European Council, which called on Montenegro to take steps to fight corruption and organized crime.

The government recognizes the need to remove impediments in order to remain competitive and open the economy to foreign investors. Net foreign direct investment in 2017 reached $848 million and investment per capita is one of the highest in Europe, due to a low corporate tax rate. The biggest foreign investors in Montenegro in 2017 were Norway, Russia, Italy, Azerbaijan and Hungary.

Montenegro is currently planning major overhauls of its road and rail networks, and possible expansions of its air transportation system. In 2014, the Government of Montenegro selected two Chinese companies to construct a 41 km-long section of the country's highway system, which will become part of China's Belt and Road Initiative. Cheaper borrowing costs have stimulated Montenegro's growing debt, which currently sits at 65.9% of GDP, with a forecast, absent fiscal consolidation, to increase to 80% once the repayment to China's Ex/Im Bank of a _800 million highway loan begins in 2019. Montenegro first instituted a value-added tax (VAT) in April 2003, and introduced differentiated VAT rates of 17% and 7% (for tourism) in January 2006. The Montenegrin Government increased the non-tourism Value Added Tax (VAT) rate to 21% as of January 2018, with the goal of reducing its public debt.

GDP (purchasing power parity)$126.625 billion (2019 est.)

$121.464 billion (2018 est.)

$116.239 billion (2017 est.)

note: data are in 2010 dollars
$13.357 billion (2019 est.)

$12.835 billion (2018 est.)

$12.215 billion (2017 est.)

note: data are in 2017 dollars
GDP - real growth rate4.18% (2019 est.)

4.4% (2018 est.)

2.05% (2017 est.)
4.3% (2017 est.)

2.9% (2016 est.)

3.4% (2015 est.)
GDP - per capita (PPP)$18,233 (2019 est.)

$17,395 (2018 est.)

$16,556 (2017 est.)

note: data are in 2010 dollars
$21,470 (2019 est.)

$20,629 (2018 est.)

$19,627 (2017 est.)

note: data are in 2017 dollars
GDP - composition by sectoragriculture: 9.8% (2017 est.)

industry: 41.1% (2017 est.)

services: 49.1% (2017 est.)
agriculture: 7.5% (2016 est.)

industry: 15.9% (2016 est.)

services: 76.6% (2016 est.)
Population below poverty line23.2% (2018 est.)24.5% (2018 est.)
Household income or consumption by percentage sharelowest 10%: 2.2%

highest 10%: 23.8% (2011)
lowest 10%: 3.5%

highest 10%: 25.7% (2014 est.)
Inflation rate (consumer prices)-0.1% (2019 est.)

-1.1% (2018 est.)

2% (2017 est.)
0.3% (2019 est.)

2.6% (2018 est.)

2.3% (2017 est.)
Labor force3 million (2020 est.)167,000 (2020 est.)
Labor force - by occupationagriculture: 19.4%

industry: 24.5%

services: 56.1% (2017 est.)
agriculture: 7.9%

industry: 17.1%

services: 75% (2017 est.)
Unemployment rate14.1% (2017 est.)

15.9% (2016 est.)
15.82% (2019 est.)

18.8% (2018 est.)
Distribution of family income - Gini index36.2 (2017 est.)

28.2 (2008 est.)
39 (2015 est.)

32.3 (2013 est.)
Budgetrevenues: 17.69 billion (2017 est.)

expenditures: 17.59 billion (2017 est.)

note: data include both central government and local goverment budgets
revenues: 1.78 billion (2017 est.)

expenditures: 2.05 billion (2017 est.)
Industriesautomobiles, base metals, furniture, food processing, machinery, chemicals, sugar, tires, clothes, pharmaceuticalssteelmaking, aluminum, agricultural processing, consumer goods, tourism
Industrial production growth rate3.9% (2017 est.)-4.2% (2017 est.)
Agriculture - productsmaize, wheat, sugar beet, milk, sunflower seed, potatoes, soybeans, plums/sloes, apples, barleymilk, potatoes, grapes, vegetables, tomatoes, watermelons, wheat, apples, cabbages, barley
Exports$15.92 billion (2017 est.)

$13.99 billion (2016 est.)
$422.2 million (2017 est.)

$362 million (2016 est.)
Exports - commoditiesinsulated wiring, tires, corn, cars, iron products, copper (2019)aluminum, packaged medicines, cars, zinc, wine (2019)
Exports - partnersGermany 12%, Italy 10%, Bosnia and Herzegovina 7%, Romania 6%, Russia 5%  (2019)Serbia 17%, Hungary 15%, China 11%, Russia 7%, Bosnia and Herzegovina 6%, Germany 6%, Italy 5%, Poland 5% (2019)
Imports$20.44 billion (2017 est.)

$17.63 billion (2016 est.)
$2.618 billion (2017 est.)

$2.29 billion (2016 est.)
Imports - commoditiescrude petroleum, cars, packaged medicines, natural gas, refined petroleum (2019)refined petroleum, cars, packaged medicines, recreational boats, cigarettes (2019)
Imports - partnersGermany 13%, Russia 9%, Italy 8%, Hungary 6%, China 5%, Turkey 5% (2019)Serbia 30%, Bosnia and Herzegovina 8%, Croatia 8%, Italy 6%, Greece 6%, Germany 5% (2019)
Debt - external$30.927 billion (2019 est.)

$30.618 billion (2018 est.)
$2.516 billion (31 December 2017 est.)

$2.224 billion (31 December 2016 est.)
Exchange ratesSerbian dinars (RSD) per US dollar -

112.4 (2017 est.)

111.278 (2016 est.)

111.278 (2015 est.)

108.811 (2014 est.)

88.405 (2013 est.)
euros (EUR) per US dollar -

0.885 (2017 est.)

0.903 (2016 est.)

0.9214 (2015 est.)

0.885 (2014 est.)

0.7634 (2013 est.)
Public debt62.5% of GDP (2017 est.)

73.1% of GDP (2016 est.)
67.2% of GDP (2017 est.)

66.4% of GDP (2016 est.)

note: data cover general government debt, and includes debt instruments issued (or owned) by government entities other than the treasury; the data include treasury debt held by foreign entities; the data include debt issued by subnational entities, as well as intragovernmental debt; intragovernmental debt consists of treasury borrowings from surpluses in the social funds, such as for retirement, medical care, and unemployment; debt instruments for the social funds are not sold at public auctions
Reserves of foreign exchange and gold$11.91 billion (31 December 2017 est.)

$10.76 billion (31 December 2016 est.)
$1.077 billion (31 December 2017 est.)

$846.5 million (31 December 2016 est.)
Current Account Balance-$2.354 billion (2017 est.)

-$1.189 billion (2016 est.)
-$780 million (2017 est.)

-$710 million (2016 est.)
GDP (official exchange rate)$51.449 billion (2019 est.)$5.486 billion (2019 est.)
Credit ratingsFitch rating: BB+ (2019)

Moody's rating: Ba3 (2017)

Standard & Poors rating: BB+ (2019)
Moody's rating: B1 (2016)

Standard & Poors rating: B+ (2014)
Ease of Doing Business Index scoresOverall score: 75.7 (2020)

Starting a Business score: 89.3 (2020)

Trading score: 96.6 (2020)

Enforcement score: 63.1 (2020)
Overall score: 73.8 (2020)

Starting a Business score: 86.7 (2020)

Trading score: 91.9 (2020)

Enforcement score: 66.8 (2020)
Taxes and other revenues42.7% (of GDP) (2017 est.)37.2% (of GDP) (2017 est.)
Budget surplus (+) or deficit (-)0.2% (of GDP) (2017 est.)-5.6% (of GDP) (2017 est.)
Unemployment, youth ages 15-24total: 27.5%

male: 26.1%

female: 29.9% (2019 est.)
total: 25.2%

male: 25.8%

female: 24.3% (2019 est.)
GDP - composition, by end usehousehold consumption: 78.2% (2017 est.)

government consumption: 10.1% (2017 est.)

investment in fixed capital: 18.5% (2017 est.)

investment in inventories: 2% (2017 est.)

exports of goods and services: 52.5% (2017 est.)

imports of goods and services: -61.3% (2017 est.)
household consumption: 76.8% (2016 est.)

government consumption: 19.6% (2016 est.)

investment in fixed capital: 23.2% (2016 est.)

investment in inventories: 2.9% (2016 est.)

exports of goods and services: 40.5% (2016 est.)

imports of goods and services: -63% (2016 est.)
Gross national saving18.2% of GDP (2019 est.)

18.7% of GDP (2018 est.)

15.5% of GDP (2017 est.)
16.9% of GDP (2019 est.)

14.9% of GDP (2018 est.)

14.2% of GDP (2017 est.)

Source: CIA Factbook