SME Policy Index for Western Balkans and Türkiye 2026 – Economy Profile for Serbia

Serbia: SME sector overview

The SME landscape in Serbia

Serbia is an upper middle-income economy with a gross domestic product (GDP) of EUR 83.3 billion and a population of approximately 6.6 million in 2024, making it the largest economy in the Western Balkans sub-region. At EUR 12 641 per capita, it recorded the highest income level in current euro terms in the region in 2024. Over the 2019-2024 period, real GDP expanded cumulatively by 18.4%, corresponding to an average annual growth rate of 3.4%, exceeding the EU-27 average of 1.1% per year over the same period. This supported a degree of income convergence, with Serbia’s PPP-adjusted GDP per capita increasing from 42.2% to 51.6% of the EU-27 average. However, post-pandemic growth dynamics have been uneven: a strong rebound in 2021 was followed by moderation in 2022-2023, before a partial recovery in 2024 (3.9%). This pattern points to a growth trajectory that, while resilient overall, remains sensitive to external conditions and domestic structural factors (Eurostat, 2026[6]).

Serbia’s recent growth performance has relied primarily on foreign direct investment (FDI) inflows and public capital expenditure, while domestic private investment has played a comparatively smaller role. FDI averaged 6.1% of GDP over the 2021-2024 period but fell to an estimated 3% of GDP in 2025, contributing to a sharp growth deceleration to a projected 2.1% (IMF, 2025[7]). Even before the slowdown, the structure of these inflows was a challenge: concentrated in labour-intensive manufacturing and construction, FDI generated employment without proportionate productivity gains – evidenced by manufacturing’s declining share of GDP, from 17.8% to 12.7% between 2016 and 2024 despite significant headcount expansion. The one area of genuine organic dynamism – services, and in particular ICT, whose GDP share rose from 5.1% to 8.5% over the same period (Eurostat, 2026[6]) – has increasingly attracted FDI of its own, though from a smaller base. By contrast, domestic private investment remains relatively modest at approximately 5-6% of GDP, below the EU average, suggesting scope to further strengthen the role of domestic firms – including small and medium-sized enterprises (SMEs) – in expanding productive capacity and innovation (CEVES, 2024[8]).

These structural features increasingly intersect with labour market developments, which have become an important determinant of growth sustainability. The unemployment rate fell from 11.3% in 2019 to 8.6% in 2024 and the employment rate for the 20-64-year-old age group rose from 62.9% to 71.3% (Eurostat, 2026[9]); however, the tighter market has translated into a persistent inability to recruit and retain adequate staff, identified as a barrier to growth by 77% of enterprises (CEVES, 2024[8]). Wage costs rose sharply: average nominal wages increased by approximately 14% in 2024, driven by public sector wage growth of 14.1% and a 17.8% increase in the net minimum wage per working hour (SORS, 2026[10]), both feeding through to private sector expectations. These increases outpaced productivity gains, compressing margins particularly among SMEs. The combined pressure of rising wage and input costs and staffing difficulties is increasingly forcing enterprises to defer investment – creating a cycle in which labour shortages depress the capital deepening that would alleviate them (CEVES, 2024[8]). Cumulative inflation of approximately 45% between 2019 and 2024 (Eurostat, 2026[11]) further eroded real margins, with the effect the most acute among microenterprises with limited pricing power.

Structure and dynamics of the SME sector

Micro, small and medium-sized enterprises (MSMEs) constitute the backbone of Serbia’s non‑financial business sector, accounting for 99.7% of all enterprises, 65.7% of employment and 53.7% of value added in 2023 (Figure 1) (SORS, 2026[12]) – these last two shares broadly in line with EU-27 averages of approximately 64% and 51%, respectively (Eurostat, 2026[4]). In merchandise exports, however, the picture diverges sharply: MSMEs generated only 33.5% of total export value in 2024, with the remaining 66.2% attributable to 438 large enterprises (Eurostat, 2026[13]). This concentration is unusually pronounced by regional standards – most Western Balkan economies have thin large enterprise segments – and reflects the weight of a relatively small number of FDI-linked, export-oriented firms in labour-intensive manufacturing.

The progressive nature of this asymmetry is visible across all dimensions: as enterprise size increases, the gap between the share of firms and the share of economic output widens markedly. Large enterprises represent less than 1% of registered entities yet account for 34% of employment, 46% of value added and 66% of exports, a footprint that grew between 2021 and 2023 across each of these indicators. The corollary is that MSMEs, while numerically dominant and broadly representative of employment, remain structurally peripheral to Serbia’s export economy and to the FDI-driven segments that have anchored recent growth. With 188 504 registered entities, microenterprises account for 90% of all firms in the business economy yet generate only 14% of total value added, reflecting a preponderance of small and fragmented business models with limited growth capacity. Small and medium-sized enterprises (16 315 and 3 142 firms, respectively) together comprise less than 10% of registered entities but contribute nearly three-quarters of MSME value added, confirming that this segment carries the sector’s primary productivity potential (SORS, 2026[12]; Eurostat, 2026[13]).

Enterprise dynamics between 2021 and 2023 indicate a modest shift in economic weight toward larger enterprises. The total number of MSMEs declined marginally (with a compound annual growth rate of ‑0.6%), with small enterprises contracting at ‑1.1% per year and medium-sized enterprises growing modestly at 2.5%. The number of large enterprises expanded at 2.8% annually. The MSME share of total employment fell from 66.9% to 65.7% and its share of value added from 54.6% to 53.7% (SORS, 2026[12]), confirming that growth in this period was more heavily concentrated in the large enterprise segment, predominantly FDI-linked firms.

Figure 1. Business demography indicators in Serbia, 2021 and 2023

Notes: Figures refer to the most recent year for which data are available. Export refers only to merchandise/goods export; services are not included.

Source: SORS (2026[12]); Eurostat (2025[5]).

The sectoral composition of the MSME economy reflects a profile typical of a developing market‑oriented economy, but with notable asymmetries between the distribution of firms and their contribution to value added (Table 4). Wholesale and retail trade (sector G) is the dominant activity – encompassing 31.3% of MSME firms and 24.0% of MSME value added – reflecting its atomised structure of predominantly small retail service providers. Manufacturing (C) and the ICT sector (J), with 14.4% and 4.8% of MSME firms, respectively, generate 20.3% and 11.4% of MSME value added, both exhibiting significantly higher productivity than the sector-wide average; these two sectors represent the core of Serbian MSMEs’ productivity potential. Accommodation and food services (I) and professional services (M) employ almost exclusively MSMEs (95.6% and 90.9% of sectoral employment, respectively), but at the cost of relatively lower value added per worker. The structural abundance of MSMEs in low value‑added sectors, combined with the concentration of manufacturing and ICT activity in the hands of large, predominantly foreign-owned enterprises, defines a central structural challenge: how to broaden the base of MSMEs operating in high-productivity segments (SORS, 2026[12]).

Table 4. Sectoral profile of the MSME sector in Serbia in selected sectors, 2023

	Significance of sector for the MSME economy		Significance of MSMEs within the sector			Macro context
Sector	(a) Share of total MSME firms1	(b) Contribution to total MSME value added2	(c) MSME share in number of companies3	(d) MSME share in sector employment4	(e) MSME share in sector value added5	(f) Sector share in GDP6
G. Wholesale and retail trade	31.3%	24.0%	99.8%	73.4%	69.6%	10.4%
C. Manufacturing	14.4%	20.3%	99.1%	52.6%	40.9%	13.3%
J. Information and communication technology	4.8%	11.4%	99.5%	64.4%	50.3%	8.2%
F. Construction	7.8%	11.1%	99.8%	83.5%	74.0%	5.0%
M. Professional, scientific and technical activities	11.7%	9.7%	99.9%	90.9%	88.5%	5.3%
H. Transportation and storage	7.2%	7.2%	99.8%	59.4%	57.6%	4.1%
N. Administrative and support service activities	2.9%	4.0%	99.0%	44.8%	53.0%	2.4%
I. Accommodation and food service activities	9.3%	3.3%	99.9%	95.6%	87.8%	1.6%

Notes: MSME: micro, small and medium-sized enterprise. Reader’s guide: The table is organised in three groups. Columns a-b show how the MSME population is distributed across sectors (i.e. how important each sector is for MSMEs). Columns c-e show how dominant MSMEs are within each sector (i.e. how important MSMEs are for the sector). Column f provides macroeconomic context on the overall size of each sector. Rows are sorted by contribution to MSME value added (column b), from highest to lowest.

1. Share of total MSME enterprises in the business economy.

2. Each sector’s contribution to aggregate MSME value added across the business economy.

3. MSME share as a percentage of the total number of enterprises within each sector.

4. MSME employment as a percentage of total employment within each sector; lower values (e.g. manufacturing 52.6%) indicate a significant presence of large enterprises.

5. MSME value added as a percentage of total value added within each sector.

6. Each sector’s share in GDP (2024); independent of enterprise size. Rows sorted by contribution to MSME value added (column b), from highest to lowest.

Sources: SORS (2026[12]; 2026[14]).

Labour productivity

Labour productivity – measured as value added per person employed – reveals a deep structural asymmetry within Serbia’s business economy that extends well beyond aggregate MSME averages. In 2023, microenterprises recorded an average productivity of EUR 11 279 per employee, compared with EUR 22 422 for small, EUR 27 961 for medium-sized and EUR 31 435 for large enterprises (Table 5). Aggregate MSME productivity stood at EUR 19 030 per employee, equivalent to 60.5% of large enterprise productivity (SORS, 2026[12]). This gap reflects a combination of factors: more limited access to advanced technologies and external financing, lower integration into export value chains, and the concentration of microenterprises in low-value-added activities.

Nominal productivity growth was strong across all size classes between 2021 and 2023, but should be interpreted with an important qualification: a substantial share of these gains reflects price-level effects rather than real efficiency improvements. MSMEs recorded a compound annual productivity growth rate of 16.4%, marginally above the 15.6% for large enterprises, which – combined with robust value-added growth – points to a gradual narrowing of the gap in nominal terms (SORS, 2026[12]). Adjusted for cumulative inflation of approximately 12% per year over the 2021-2023 period (Eurostat, 2026[11]), however, real productivity gains are considerably more modest and highly differentiated across sectors. In a broader comparative perspective, Serbia’s nominal labour productivity stands at approximately 39% of the EU-27 average (Eurostat, 2026[4]), confirming that accelerating real productivity growth – by strengthening the technological capacity of SMEs, improving access to finance and deepening their integration into value chains – remains the central development imperative.

Table 5. Key indicators of the MSME sector in Serbia, 2023 and 2021-2023 growth

	Micro	Small	Medium	MSME total	Large	MSME share1
Levels (2023)
Number of enterprises2	188 504	16 315	3 142	207 961	677	99.7%
Persons employed3	508 432	316 114	321 140	1 145 686	597 774	65.7%
Value added (EUR m)4	5 735	7 088	8 979	21 802	18 791	53.7%
Labour productivity (EUR)5	11 279	22 422	27 961	19 030	31 435	60.5%6
Compound annual growth rate, 2021-20237
Number of enterprises	-0.6%	-1.1%	+2.5%	-0.6%	+2.8%	-0.02 p.p.
Persons employed	0.0%	-0.7%	+2.4%	+0.5%	+3.1%	-1.15 p.p.
Value added	+21.4%	+13.3%	+17.3%	+17.0%	+19.1%	-0.91 p.p.
Labour productivity	+21.4%	+14.2%	+14.5%	+16.4%	+15.6%	+0.90 p.p.

Notes: Covers business economy excluding agriculture, forestry, fishing (NACE Section A), financial and insurance activities (Section K), and public administration (Section O).

1. MSME share: In the upper panel, this column shows the MSME share in the economy-wide total for each indicator. In the lower panel, values show the change in this share between 2021 and 2023 in percentage points (p.p.).

2. Number of enterprises: Count of active legal entities registered in the business economy, classified by number of employees (micro: 1‑9; small: 10-49; medium: 50-249; large: 250+) following the EU SME definition.

3. Persons employed: Total number of persons engaged in productive activity, including employees and working proprietors, measured as annual averages.

4. Value added: Gross value added at factor cost, defined as turnover – the cost of goods and services purchased + capitalised production – taxes on products. Expressed in millions of euros at current prices.

5. Labour productivity: Gross value added at factor cost per person employed (EUR). This is the standard measure of apparent labour productivity used in Eurostat Structural Business Statistics. It captures the average economic output generated per worker but does not adjust for differences in capital intensity, hours worked or workforce composition across size classes.

6. Productivity ratio: MSME labour productivity expressed as a percentage of large enterprise labour productivity. Values below 100% indicate that MSMEs are, on average, less productive than large firms.

7. Compound annual growth rate (CAGR): The annualised growth rate over the two-year period 2021-2023, calculated as (Value2023/ Value2021)^(1/2) – 1. All growth rates are nominal (not adjusted for inflation). Annual consumer price inflation over the period was approximately 12%, implying that real growth rates are lower than the nominal rates shown for value added and labour productivity.

Sources: SORS (2026[12]); National Bank of Serbia (n.d.[15]); author’s calculations.

SME outlook

Serbia’s MSME sector displays many of the hallmarks typical of a maturing market economy: near‑universal presence across industries, a dominant role in services and construction employment, and a broad base of microenterprises forming the social fabric of local economies. At the same time, several structural concerns stand out. Despite MSMEs representing 99.7% of enterprises and 65.7% of employment, they generated only 53.7% of value added in 2023 – a productivity gap that has widened relative to large enterprises (SORS, 2026[12]). The gap is even more pronounced in export performance: MSMEs account for 93% of all exporting enterprises yet generate only 33.5% of merchandise export value, with the remaining 66.2% concentrated in 438 large firms (Eurostat, 2026[13]). This export asymmetry deepened between 2021 and 2024, as large enterprise export values grew at a compound annual growth rate of 18.2% compared with 14.9% for MSMEs (Eurostat, 2026[13]) – and the OECD’s 2025 Economic Convergence Scoreboard notes a relative decrease in the export activity of SMEs in Serbia over the medium term (OECD, 2025[16]). These trends point to a structural difficulty in integrating MSMEs into domestic and international supply chains. Closing this gap is a central challenge for the period ahead (see Dimension 10).

The business environment remains an important constraint, particularly for domestic firms. The European Commission notes that despite progress in reducing the administrative burden, weaknesses persist that affect SMEs in particular: red tape, political interference, weaknesses in the rule of law and limited efficiency of the public administration create disproportionate costs for smaller firms that lack the organisational capacity to absorb them. SMEs face an uneven playing field relative to large companies and foreign investors, who benefit from more direct access to government and are significantly more likely to receive state subsidies. The European Commission also notes that Serbia’s continued use of budgetary subsidies for newly created jobs as an incentive for FDI is inconsistent with the industrial policy goal of favouring value added over labour cost, and with the need to better integrate SMEs into supply chains (European Commission, 2025[17]). On the financing side, while SME loans account for approximately two‑thirds of total corporate lending, borrowing costs are significantly higher than for large companies; public credit guarantee schemes that could compensate for SMEs’ lack of collateral are lacking, and the budget for SME support programmes remains modest and prone to ad hoc cuts (see Dimension 6) (European Commission, 2025[17]; OECD, 2025[16]). High social security contributions on low wages, parafiscal charges and red tape sustain informal economy activity, further distorting competition to the detriment of compliant SMEs; reducing this burden while establishing a more level playing field for domestic firms remains a priority for the current policy cycle (European Commission, 2025[17]).

Against this backdrop, the labour market is emerging as an additional pressure point – and one that operates asymmetrically to the disadvantage of SMEs. Large FDI-linked firms can offer structured career paths, higher wages and non-wage benefits; SMEs compete for the same shrinking pool of workers with more limited means, without the wage cost advantages that state employment subsidies channel toward foreign investors (European Commission, 2025[17]). The structural supply problem is deepening: the Western Balkans has already lost approximately 14% of its working-age population since 2000 through ageing and outmigration, and labour shortages are projected to become acute from 2030 in the absence of significant reform (World Bank, 2025[18]). Youth unemployment at 23.5% in the first half of 2025 – nearly three times the national average – does not reflect an excess of labour but a mismatch: limited job opportunities outside urban centres drive emigration rather than employment; as the IMF notes, overqualification coexists with demand-side skill gaps in a way that simultaneously constrains SME productivity upgrading and removes the higher skilled workers that SMEs most need to move up the value chain (World Bank, 2025[18]; Nguyen, 2025[19]) (see Cluster 4). Addressing these interlocking constraints – levelling the competitive environment for domestic firms, broadening access to finance and aligning skills supply with productive demand – is a necessary condition for Serbia’s MSMEs to deepen their integration into supply chains and for the economy’s convergence trajectory to become more broadly shared across the enterprise population.

References

[8] CEVES (2024), Analysis of the SME sector in Serbia in 2024, Center for Advanced Economic Studies, https://ceves.org.rs/wp-content/uploads/2024/10/CEVES_Barometar_MSP-Kompas_2024.pdf (accessed on  February  2026).

[17] European Commission (2025), Serbia 2025 Report, European Commission, Brussels, https://enlargement.ec.europa.eu/serbia-report-2025_en?prefLang=fi.

[1] European Commission (2003), Commission Recommendation 2003/361/EC of 6 May 2003 Concerning the Definition of Micro, Small and Medium-sized Enterprises, Official Journal of the European Union, No. L 124/36, European Union, https://eur-lex.europa.eu/eli/reco/2003/361/oj/eng (accessed on  February 2026).

[11] Eurostat (2026), Harmonised Indices of Consumer Prices (HICP) Database, accessed in February 2026, https://ec.europa.eu/eurostat/web/hicp.

[9] Eurostat (2026), Labour Force Survey: Employment and Unemployment Database, https://ec.europa.eu/eurostat/web/lfs (accessed on  February  2026).

[6] Eurostat (2026), National Accounts Database, https://ec.europa.eu/eurostat/web/national-accounts/database (accessed on  February  2026).

[4] Eurostat (2026), “Structural Business Statistics”, https://ec.europa.eu/eurostat/web/structural-business-statistics (accessed on 25 February 2026).

[13] Eurostat (2026), “Trade by NACE Rev. 2 activity and enterprise size class [dataset]”, https://doi.org/10.2908/ext_tec01 (accessed on  February 2026).

[5] Eurostat (2025), International Trade in Goods Database, https://ec.europa.eu/eurostat/web/international-trade-in-goods/database (accessed on 5 February 2026).

[2] Government of the Republic of Serbia (2019), Law on Accounting, No. 73/2019 and 44/202, Official Gazette of the Republic of Serbia.

[7] IMF (2025), Republic of Serbia: Second Review Under the Policy Coordination Instrument and Request for Modification of Quantitative Targets-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Serbia, International Monetary Fund, Washington, DC, https://www.imf.org/en/publications/cr/issues/2025/12/23/republic-of-serbia-second-review-under-the-policy-coordination-instrument-and-request-for-572684.

[15] National Bank of Serbia (n.d.), “Dinar exchange rate”, https://www.nbs.rs/en/indeks (accessed on 5 February 2026).

[19] Nguyen, A. (2025), “Navigating Serbia’s economic future: The crucial role of productivity”, Selected Issues Paper, SIP/2025/111, International Monetary Fund, Washington, DC, https://www.imf.org/-/media/files/publications/selected-issues-papers/2025/english/sipea2025111.pdf.

[16] OECD (2025), Economic Convergence Scoreboard for the Western Balkans 2025, OECD Publishing, Paris, https://doi.org/10.1787/bc0babf3-en.

[12] SORS (2026), “Annual indicators of business entities, by classes of persons employed”, https://data.stat.gov.rs/Home/Result/190102?languageCode=sr-Cyrl&displayMode=table (accessed on  February 2026).

[10] SORS (2026), “Average monthly earnings for the year in public sector [dataset]”, https://data.stat.gov.rs/Home/Result/2403040404?languageCode=sr-Cyrl&displayMode=table (accessed on  February 2026).

[14] SORS (2026), “Gross value added, by activities, NACE Rev. 2 [dataset]”, https://data.stat.gov.rs/Home/Result/0902010301?languageCode=en-US (accessed on 5 February 2026).

[3] SORS (2025), Structural Business Statistics Database, Statistical Office of the Republic of Serbia, https://www.stat.gov.rs/en-us/oblasti/strukturne-poslovne-statistike (accessed on 5 February 2026).

[18] World Bank (2025), Western Balkans Regular Economic Report No. 28, Fall 2025: Towards Better Jobs, World Bank Group, Washington, DC, https://documents.worldbank.org/en/publication/documents-reports/documentdetail/099100625100539134.