By Ognjen Radonjić, Professor at the Faculty of Philosophy, University of Belgrade

In presenting its economic strategy “Serbia 2030” in early March, the government announced ambitious new projects that will allegedly keep Serbia at the top of the European economic ladder. As the Serbian authorities like to put it, Serbia is the fastest-growing economy in Europe, with record-low unemployment and an all-time high standard of living.

Thus, government officials highlight that in 2025, gross domestic product (GDP) rose to 90 billion euros, or 13,500 euros per capita, with projections that it will reach 20,000 euros by 2030. However, what they deliberately omit is that this refers to nominal GDP, which includes inflation, meaning it can grow without any actual increase in production.

This is why economists focus exclusively on real GDP, which measures the actual volume of production without the influence of prices. For cross-country comparisons, real GDP per capita is what matters. According to Eurostat, Serbia’s real GDP per capita in 2025 was significantly lower than the loudly trumpeted nominal figure of 13,500 euros, standing at 9,140 euros – roughly a quarter of the EU average.

What GDP shows and what it hides

However, for analysing trends in purchasing power and living standards, even real GDP per capita is not an adequate indicator. This is because it primarily measures the economy’s real productive capacity, rather than the income and purchasing power of the population. As such, real GDP per capita does not answer the question every household cares about: what can I actually afford? Income-based, or purchasing power, refers to the real value of the average resident’s earned income – specifically, how many goods and services we can genuinely buy with our earnings after accounting for prices and taxes paid.

The indicator Eurostat uses to compare living standards across countries is Actual Individual Consumption (AIC) per capita in purchasing power standards. This metric accounts for all goods and services actually consumed by individuals. It encompasses consumer goods and services purchased directly by citizens, as well as services provided by non-profit organisations and the state for individual consumption – such as healthcare and education.

Therefore, unlike GDP – which measures how much a country actually produces – Actual Individual Consumption measures what citizens actually receive and consume from that output. It serves as a better indicator of the average resident’s material well-being than real GDP, which is primarily a measure of the state’s economic power rather than the standard of living of its citizens.

To illustrate, consider two individuals. One lives in a relatively poor country that spends a significant portion of its resources on the military, police, repressive apparatus, paramilitary formations, and servicing public debt.

The second also lives in a poor country with a lower real GDP than the first, but with a more developed social welfare system that provides accessible, decent healthcare, education, and childcare. Even though the second country has a lower real GDP, the individual living there may enjoy a higher actual standard of living because part of their consumption comes through public services. This is precisely what AIC aims to capture.

On average, we spend significantly less than the residents of Montenegro and Turkiye

It is important to emphasize that AIC is a reliable tool for spatial comparisons in a given year – meaning how far ahead or behind a country stands relative to others at a specific point in time. It is far less reliable for tracking dynamics over time, as Eurostat periodically revises its methodology and retrospectively updates data.

All in all, according to data published in late June this year, Serbia’s Actual Individual Consumption per capita in purchasing power standards last year stood at 57 per cent of the European Union average. This means that in 2025, the average Serbian resident – adjusted for price differences – spent just over half of what the average EU resident spent, as shown in Chart 1.

At the top of the list is Luxembourg, with an average resident consumption level of 145 per cent of the EU average, followed by Norway (128) and Germany (120). At the bottom, below Serbia, are only North Macedonia at 50 per cent, Albania at 48 per cent, and Bosnia and Herzegovina at 44 per cent of the EU average.

Compared to other comparable Central and Eastern European (CEE) countries, Serbia lags noticeably behind – even when compared to Montenegro, where average resident consumption stands at 71 per cent of the EU average, and Turkiye, where it is at 70 per cent.

Poland enjoyed the highest standard of living among CEE countries last year, reaching 88 per cent of the EU average, followed by Lithuania (87) and Romania (86). Consistently, in 2025, the average Serbian resident – adjusted for price differences – spent 66 per cent of what the average resident of Slovenia spent, and 72 per cent of what was spent in Croatia, as illustrated in Chart 2.

Sleight of hand as a Government strategy

Sleight of hand as the current administration’s primary strategy is not confined to economics; it has clear parallels in the political sphere as well. An illustrative example from contemporary Serbian reality is the potential use of an acoustic cannon against peaceful protesters during the student demonstrations in Belgrade on 15 March 2025.

Slightly over a year later, in June 2026, the same authorities accused the students themselves of having simulated the entire incident.

This distortion of reality, analogous to the manipulation of economic indicators, is distinctly Orwellian. It is not mere hypocrisy, but a deliberate denial of objective reality alongside the simultaneous enforcement of their own version of events as the sole valid truth. Orwell termed this tyrannical practice doublethink: “To tell deliberate lies while genuinely believing in them, to forget any fact that has become inconvenient, and then, when it becomes necessary again, to draw it back from oblivion, to deny the existence of objective reality and all the while to take account of the reality which one denies – all this is indispensably necessary.”

Within this framework, the doublethink lies in the fact that after more than a decade of allegedly “fastest growth in Europe”, citizens of Serbia can, on average, afford barely more than half of what is available to the average EU resident. Such a gulf clearly shows that manipulating nominal metrics does not bring real convergence with developed, or even comparable former transition, economies.

Furthermore, the structure of growth and the distribution of resources fundamentally shape the standard of living which, despite relentless narrative sleight of hand, remains relatively low.

(Radar, 28.07.2026)

https://radar.nova.rs/ekonomija/zivotni-standard-u-srbiji-gore-tri-drzave/