Serbia Braces For Tough Economic Times

By Bojana Milovanovic

Spending per capita in Serbia is about 2.5 times below that of Europeans, or 44% of the EU average, a raise of 1% from 2010, according to recent Eurostat results.

Economically, Serbia lags behind Bulgaria, which has the lowest GDP per capita in the EU — 45% of the European average.

Miroslac Zdravkovic, an assistant at the Belgrade Institute of Economics, said that when it comes to standard of living, Serbia is in decline as are other Western Balkan countries. His long-term forecasts are not favourable either.

“In 2014, according to the GDP average, Albania will be ahead of Serbia, because — thanks to emigration — it is not in a banking crisis and has not seen a GDP decline in the last years. In 2014, only Bosnia and Herzegovina (BiH) will be poorer than Serbia,” Zdravkovic said.

He adds that salaries in Serbia are five times lower than in the Western countries, but prices of services such as health care and education are only slightly lower, which yields a three times lower living standard in Serbia than in the West.

“We are a broken state — until a new state is formed there will be no progress. If we go into geopolitics, Kosovo and Albania have unfettered economic growth, while Serbia consciously and deliberately pushes itself down,” Zdravkovic said.

While the living standard in Serbia has been rapidly decreasing over the last three years, the number of unemployed soared and continues to rise, warned Danilo Sukovic of the Institute for Social Research in Belgrade.

“With an increasingly poor economy, salaries and their regular payments became more uncertain,” Sukovic told SETimes, adding that “no one could have survived what Serbia suffered: wars, sanctions, and Slobodan Milosevic.”

“After the democratic change in 2000, the new governments not only failed to take the opportunity, but rather continued with the Milosevic system, with a difference that there was not just one political party, and no sanctions and isolation from international institutions,” Sukovic said.

A lot of dirty money went through private enterprises, cases of theft and fraud went unhindered, and tycoons ruled Serbia, he added. The institutions are working in the interest of tycoons and politicians, while the people get poorer.

“We were able to cover that up with foreign investments, but all came to the surface with the appearance of the global crisis. Nonetheless, we would have found ourselves in that situation even without the global downturn,” Sukovic said.

The solution to the problem, he said, is to sever ties between the executive power, political parties, tycoons and the judiciary.

“Everything should be transparent; we need big results in the battle against corruption — an arrest like Sanader’s in Croatia. Those who brought this on should be held accountable. The entire privatisation process should be reviewed,” Sukovic said.

For the citizens the situation is plain — their living standard is low.

“I’m daily faced with the fact that the standard is three times lower than in Europe. When I go to the store daily, I’m aware of how expensive everything is, and how much I cannot afford,” pensioner Slavoljub Dragic, 67, told SETimes.

In 2011, Serbian citizens had a living standard three times lower than the EU average, according to Eurostat data. In GDP per capita, Serbia is at 35% of the European average, while Macedonia is at 36%. Montenegro improved with 43% GDP in 2011, 2% higher than in 2010.

In Croatia GDP was the same as in 2010 — 61% of the EU average. The worst according to that indicator are Albania with 31% and BiH with 29%. The BiH indicator decreased by 2%, compared with 2010, while in Albania, the indicator went up by 3%.