In recent years, a study conducted by Bloomberg Adria on June 19 has shed light on the persistent issue of unregistered economic activity in Serbia. According to the report, over a fifth of the country’s economic activity remains unregistered, which represents approximately €14.7bn or 21.1% of GDP. Despite efforts to curb this phenomenon over the past decade, unregistered activities continue to significantly impact Serbia’s financial landscape.
The study titled “Assessment of the Height and Dynamics of the Grey Economy in Serbia” was conducted by professors from the Faculty of Economics in Belgrade and reveals that the grey economy has fluctuated over time. From 2009 to 2023, it averaged 23.6% of GDP and peaked at 29.1% in 2013 before hitting a low of 17.9% in 2021. However, recent years have seen a resurgence in unreported economic activities, with it remaining third smaller than its peak level in income terms in 2023 but still significant nonetheless.
Unreported earnings account for about one-sixth (6.8%) of GDP or €4.7bn in terms of income, which is among the lowest levels recorded over the past fifteen years. This growth was primarily attributed to leniency during the economic crisis and political changes as well as tax collection system inefficiencies before post-2013 improvements such as digitalised inspection systems, penal policy reforms, and labour market flexibility led to a noticeable decline in unregistered activities.
Despite these improvements, challenges persist when it comes to public finances and fair business conditions due to grey economy persistence concerns raised by experts emphasize strengthening inspection services’ capacity and efficiency while implementing regulatory reforms promoting cashless transactions and boosting tax morale further suppresses this phenomenon.
In conclusion, despite progress made towards curbing unregistered economic activity in Serbia, much work remains to be done to ensure sustainable development through improving inspection services’ capacity and efficiency while implementing regulatory reforms promoting cashless transactions and boosting tax morale further suppresses this phenomenon ultimately leading to better public finances and fair business conditions for all stakeholders involved.
