Serbia's Economic Growth and Job Creation Depend on Investments in Climate Resilience: World Bank Report

The report stresses the critical role of climate action in the country’s long-term development, urging immediate investments to safeguard people, property, and infrastructure from climate-related disasters.

Serbia can sustain its economic growth and generate new employment opportunities by prioritizing investments in climate resilience and decarbonization, according to the World Bank Group’s Country Climate and Development Report for Serbia, released today. The report stresses the critical role of climate action in the country’s long-term development, urging immediate investments to safeguard people, property, and infrastructure from climate-related disasters.

$9.5 Billion Investment Needed for Climate Resilience

Serbia is projected to need $9.5 billion over the next decade to protect against the worsening impacts of climate change, including floods, landslides, droughts, heatwaves, wildfires, and earthquakes. These investments, representing 0.5 percent of GDP annually, are essential to mitigate the negative effects on vital sectors such as water and energy security, agriculture, and transportation infrastructure. Without these investments, the report warns that Serbia’s economy could shrink by at least 15 percent by 2050 due to climate-related disasters.

“The benefits of these investments far outweigh the costs,” said Nicola Pontara, the World Bank Country Manager for Serbia. “These efforts will not only protect people and property, but they will also drive employment growth, create new skills, and foster greater trade opportunities in green sectors, such as manufacturing electrical equipment for the wind energy industry.”

Path to Net-Zero and Energy Transition

The report further emphasizes that Serbia’s energy transition will require $10.4 billion in investments over the next 25 years to reach its net-zero target by 2050. This will involve a phased transition away from coal and a significant expansion of solar, wind, hydro, and natural gas capacity. Electrifying transportation, enhancing energy efficiency in heating and industry, and transitioning to green energy are key components of this transformation.

Investing in climate adaptation and decarbonizing the economy will be essential to Serbia’s clean and resilient development, the report states. It also notes that 85 percent of the investments required for decarbonization could come from the private sector with the establishment of a supportive regulatory environment.

Private Sector's Role in Green Transition

Nicolas Marquier, IFC Regional Manager for the Western Balkans, highlighted the potential of Serbia’s private sector to lead the country’s transition to a greener economy. “The private sector is well-positioned to drive innovation and investments in renewable energy, energy efficiency, and **sustainable development,” he said. “With the right regulatory framework, we can bridge the climate finance gap and unlock significant opportunities for a more sustainable future.”

Necessary Reforms for a Sustainable Future

The report stresses that a successful transition to a climate-resilient and decarbonized economy will require comprehensive reforms in Serbia’s financial sector to make it more accessible to small businesses and startups. It also advocates for the development of a green debt market, improvements in education and training related to green technologies, and streamlined regulations that promote greater transparency and less state intervention in various industries.

Long-Term Growth and Sustainability

Serbia’s shift towards a more sustainable and resilient economy presents significant opportunities for long-term growth, job creation, and regional leadership in green industries. By making targeted investments in climate resilience and decarbonization, the country can meet its ambitious net-zero target, build a more competitive economy, and secure a sustainable future for its citizens.

By implementing the recommended investments and reforms, Serbia can play a pivotal role in the global transition to a low-carbon economy while improving the quality of life for its population and fostering new avenues for growth and development.