A recent study by Bloomberg Adria, published on June 19, revealed that a fifth of Serbia’s economic activity remains unregistered, amounting to 21.1% of GDP or approximately €14.7bn. Despite a steady decline over the past decade, unregistered economic activities continue to significantly impact the country’s financial landscape.
The study, titled “Assessment of the Height and Dynamics of the Grey Economy in Serbia,” conducted by professors from the Faculty of Economics in Belgrade, found that unreported earnings comprised approximately 6.8% of GDP or €4.7bn in 2023 – one of the lowest levels in the past fifteen years. In contrast, in 2023, the grey economy is one-third smaller than its peak in 2013 in both income and consumption domains.
The growth of the shadow economy until 2013 was attributed to a combination of factors such as leniency during an economic crisis and subsequent political changes, as well as inefficiencies in tax collection systems. However, post-2013 improvements such as digitalized inspection systems, penal policy reforms, and labor market flexibility led to a noticeable decline in unregistered activities.
Despite these improvements, challenges remain for public finances and equitable business conditions due to persistent grey economies. The report emphasizes the need for further strengthening inspection services’ capacity and efficiency to reduce fiscal burden implementing regulatory reforms promoting cashless transactions boosting tax morale would help suppress it.
In conclusion, while progress has been made reducing unregistered economic activities’ impact on Serbia’s financial landscape still requires significant attention from policymakers to ensure sustainable growth and development for businesses and individuals alike.
