Serbia leads the region in economic cooperation with the EU


At the end of the business year, companies and countries settle accounts and make plans for the next year. The Western Balkan countries will conclude this year with a gross domestic product (GDP) growth of 2.2 percent. The European Bank for Reconstruction and Development (EBRD) predicts that the region’s economy will grow by 3.4 percent next year, while Serbia’s GDP growth could reach 3.5 percent in 2024.

Serbia is the largest partner of the EU in the Western Balkans region.

A significant boost to the economic growth of the Western Balkan countries is expected from the European Union, particularly from its newly launched “Growth Plan.” The plan, funded by the first tranche of six billion euros from the Union’s members, allocates two billion as grants (and to support budgets) for Serbia, Albania, North Macedonia, Kosovo, Montenegro, and Bosnia and Herzegovina. The remaining four billion is intended for financing capital (infrastructural) investments. For instance, one third of the non-reimbursed aid earmarked for Serbia is directly allocated to the state budget. With this funding, the European Union aims to further encourage the integration of the Western Balkan countries, assist companies from this region in joining the Union’s single market more easily, and financially support economic reforms so that the citizens of these countries can directly experience the benefits of European integration every day.

Data on economic cooperation reveal that the Western Balkan countries have no alternative other than the European path. No other process will encourage them to reform, transform, and modernize in order to improve their societies for their citizens. It is known that the six billion euros intended for the Western Balkans will be distributed according to an established scheme.

(This analysis does not encompass the total financial assistance of the European Union to the Western Balkan countries, which includes grants, pre-accession funds, and all other aid mechanisms, but focuses solely on economic parameters such as mutual trade and direct foreign investments).

Western Balkan countries have no alternative other than European integration.

During his recent visit to Brussels, the President of Serbia emphasized the significance of the European Union’s financial support for the Growth Plan. He remarked, “This is not small money for Serbia,” and added, “we consider it a great benefit for all our citizens.” “The European Union signifies life to the citizens of Serbia, and therefore, participating in the single European market is a priority for us,” stated President Aleksandar Vučić following discussions with Ursula von der Leyen, the President of the European Commission.

In all respects, particularly regarding foreign trade exchange and direct investments from companies, the European Union stands as Serbia’s largest and foremost economic partner. Moreover, Serbia is the EU’s biggest trading partner from the Western Balkans region. Serbia’s exports to EU member states constitute half of the region’s total exports to the EU. Another area where Serbia leads the region is in direct foreign investments (FDI); over 12 years, it received FDIs from the EU totaling 21.3 billion euros, which accounts for 58.4 percent of all FDIs in Serbia during that period – more than all other countries in the region. In comparison, Serbia attracted 3.1 billion euros in FDIs from China and 2.6 billion from Russia during the same period. Notably, six of the top 10 investors in the Serbian economy are companies from the European Union.

According to the Republic Institute of Statistics, Serbia’s total trade with the EU (exports and imports) amounted to 39.8 billion euros in 2022, marking a 29 percent increase from 2021. This figure represents 59 percent of Serbia’s total global trade, which reached 66.6 billion euros last year.

Serbia is a regional leader – attracting 21.3 billion euros in foreign direct investments from the EU in the past 12 years.

The RZS data shows that Serbia’s exports to the EU in 2022 nearly hit 18 billion euros, witnessing a growth of 27 percent within a year. In the same year, the Serbian economy exported goods worth 1.1 billion euros to both China and Russia. Conversely, Serbia’s imports from the EU were valued at 21.4 billion euros, constituting 55 percent of Serbia’s total imports. These imports from the EU increased by five billion euros within a year, surpassing the total imports from China in 2022.

To ensure the comparability of data on economic relations between the Western Balkans countries and the European Union, it’s crucial to refer to statistics published by the European Commission (EC), specifically its General Directorate for Trade. The data for Serbia provided by the EC shows slight but not drastic differences from those published by the Serbian Statistical Office. For instance, the EC reports that in 2022, the total foreign trade exchange (export and import) between Serbia and the EU was 42.7 billion euros, out of Serbia’s total global exchange of 66.6 billion euros. Serbia exported goods worth 18 billion euros to the EU (out of a total of 27.4 billion in exports) and imported goods valued at 24.5 billion euros (out of a total of 39.1 billion in imports). Exports to the EU in 2022 increased by 33.8 percent compared to 2021, with an average export growth rate of 13.9 percent from 2018 to 2022. Imports grew by 29.9 percent in one year, and the average growth rate over five years was 14.1 percent. In Serbia’s exports to the EU market, industrial products dominate, accounting for 90.9 percent, and they comprise 87.3 percent of imports.

6 out of 10 of the largest investors in the Serbian economy are companies from the European Union.

The data from the European Commission and its General Directorate for Trade clearly affirm that Serbia is the largest and most crucial economic partner for the Union.

Similarly, the European Union is Albania’s largest trading partner – last year, the total exchange reached 7.4 billion euros, accounting for 59 percent of Albania’s foreign trade (Serbia shares the same percentage, but the absolute figures are considerably higher in Serbia). Albania placed goods worth three billion euros (51.6 percent of its total exports) on the EU market, while goods worth 4.4 billion euros (73.3 percent of its total imports) came from the Union. The foreign trade exchange between Albania and the EU has significantly increased over the past decade – exports from Albania to the EU grew from 1.1 to three billion euros, and imports from the EU rose from 2.4 to 4.4 billion euros. In the last year alone, Albanian exports to the EU market grew by 41.7 percent, while imports from the EU increased by 18.6 percent.

Regarding direct foreign investments, the Central Bank of Albania’s data shows that last year, the country received 1.4 billion euros from EU member states, with the most significant investments coming from companies in the Netherlands, Italy, and Germany.

For Bosnia and Herzegovina, the European Union is the primary foreign trade partner, accounting for 63.3 percent of its total merchandise exchange with the world. Companies from Bosnia and Herzegovina export goods valued at 6.9 billion euros to the EU market (out of total exports of 14.6 billion euros), and import goods worth 8.7 billion euros from it. In both exports and imports, industrial products dominate (96 percent and 86.5 percent, respectively). The average annual growth rate of exports for the period 2018-2022 was 10.3 percent, and imports grew at 9.5 percent.

The Central Bank of Bosnia and Herzegovina reports that last year, the country received a total of 720 million euros in foreign direct investments, with approximately 350 million euros coming from the European Union, predominantly from Austria, Croatia, the Netherlands, and Germany.

North Macedonia also maintains strong trade relations with the European Union. The EU market represents 58.2 percent of North Macedonia’s total trade exchange with the world. The country’s economy exports goods worth 6.9 billion euros to the EU (45.5 percent of total exports) and imports goods valued at 6.8 billion euros (76.9 percent of total imports).

According to the Central Bank of North Macedonia, the country received direct foreign investments totaling 519.55 million euros in 2022. The primary investors were companies from Austria, Greece, the Netherlands, and Germany, contributing to 50.3 percent of the total foreign direct investments in North Macedonia.

Montenegro’s economic cooperation, unlike other Western Balkan countries, had previously been more focused on Russia, Serbia, Turkey, and Middle Eastern countries. Recently, however, there has been a shift towards strengthening ties with the European Union. Montenegro’s foreign trade exchange with the EU is the lowest in the region, accounting for just 41.9 percent of its total global exchange. Last year, Montenegro’s exports to the EU market increased by a record 246.4 percent compared to 2021, with an average growth rate of 63.8 percent from 2018 to 2022. The value of these exports was 1.3 billion euros, comprising 44.2 percent of Montenegro’s total exports. In 2022, Montenegro imported goods worth 1.8 billion euros from the EU.

The EU is the key economic partner for all Western Balkan countries, except for Montenegro, which has recently begun to strengthen economic ties with EU countries.

Regarding direct foreign investments, Montenegro has fewer connections with companies-investors from the EU. Out of the 734 million euros in direct investments in 2022, only 10 percent originated from Germany, the most significant European investor in Montenegro last year. The Montenegrin government recently stated that this diversification of investments into EU member states is a positive signal for Montenegro’s European integration.

The first tranche of financial assistance from the European Union to Western Balkan countries to stimulate economic growth amounts to six billion euros.

The six billion euros from the European Union to the Western Balkans can be seen as the first tranche of financial aid to stimulate economic growth. Two years ago, the EU allocated 20 billion euros to this region, of which 16 billion have already been utilized. At the recent summit in Tirana, Ursula von der Leyen, the President of the European Commission, announced new EU aid totaling 28 billion euros. This package includes two billion in grants and 26 billion in IPA funds, with four billion of it soon to become operational.

Povezane aktuelnosti

Related news