SERBIA


Serbia bridges East and West. Its treasured position in the heart of South East Europe makes it an outstanding investment location.

Total area: 77,474 sq. Km (roughly the size of the Czech Republic/ Nebraska); 88,361 sq. Km incl. the disputed Kosovo area
Population: 7.2 million; 8.9 including Kosovo
Government type: Parliamentary republic
Administrative division: Excluding Kosovo: 138 municipalities (opštine) and 23 cities (gradovi). Apart from municipalities, there are also 24 districts (okruzi), with the City of Belgrade constituting an additional district. Serbia has two autonomous provinces (autonomne pokrajine): Vojvodina in the north and claims Kosovo and Metohija in the south.
Capital + other major cities: Belgrade (1.3 million) + Novi Sad (250,000), Nis (200,000), Kragujevac (150,000), Subotica (100,000)
Currency: Serbian dinars (RSD)
Languages: Serbian (official) 88.1%, Hungarian 3.4%, Bosnian 1.9%, Romany 1.4%, other 3.4%, undeclared or unknown 1.8%
Ethnicity: Excl. Kosovo Serb 83.3%, Hungarian 3.5%, Romany 2.1%, Bosniak 2%, other 5.7%, undeclared or unknown 3.4%, in Kosovo 93% are Albanian
Religion: Excl. Kosovo: Serbian Orthodox 84.6%, Catholic 5%, Muslim 3.1%, Protestant 1%, atheist 1.1%, other 0.8%, undeclared or unknown 4.5%; in Kosovo 95.6% of population is Muslim
President: (Mr.) Tomislav NIKOLIC (since 31 May 2012)
Prime Minister: (Mr.) Aleksandar VUCIC (since 22 April 2014)
Date of EU accession: Official candidate country since March 2012
mapa



KEY FEATURES

  • 2nd largest market in South East Europe
  • Major European corridors’ intersection point
  • Unique in having duty-free access to both EU (as non-member) and to several former Soviet Republics; outside the Commonwealth of Independent States, Serbia is the only country with a Free Trade Agreement with Russia
  • High unemployment rates
  • Started EU membership negotiations in January 2014

Located in the heart of South East Europe, at the doorstep of European Union, Serbia lies on a traditional road that has for centuries connected Europe with the Middle East.

While Serbian economy suffered from isolation during the 90ies, the past twenty years of political and macroeconomic stability have rapidly transformed Serbia into an attractive business environment in Southeast Europe.

In 2008, The Republic of Kosovo declared their independence from Serbia in 2008, a move which Serbia rejects. Initially there were no relations between the two; however following years have seen increased dialogue and co-operation between the governments of Kosovo and Serbia.


MACROECONOMIC OVERVIEW

Serbia‘s transitional economy relies on manufacturing and exports, driven largely by foreign investment. The state sector remains robust, and much needed structural economic reforms have been delayed since the global financial crisis arrived in 2009. Serbia was then long mired in a deep economic crisis, and faces further painful reforms as a condition of EU membership. Other problems include high unemployment (reaching 18.5% in 2015) and stagnant household incomes.

The economy is slowly emerging from recession. Domestic demand, in particular investments, is foreseen to increasingly drive growth. However despite impressive progress in 2015 and projected GDP growth of 1.7%, budget deficits remain high and government debt is set to increase above 80% of GDP by 2017.

Serbia can benefit from a combination of factors such as strategic location, a relatively inexpensive and skilled labour force, and a generous package of incentives for foreign investments.

Selected economic indicators, Serbia, 2010 - 2016

    2010 2011 2012 2013 2014 2015 2016*
GDP
Real GDP growth
%
1.0
1.4
-1.0
2.6
-1.8
0.7
1.8
GDP at current prices
€ bn
29.77
33.42
31.68
34.26
33.32
32.91*
Foreign trade
Exports
€ bn
10.06
11.51
11.92
14.11
14.45
15.69*
Imports
€ bn
14.83
16.67
17.24
17.76
18.07
18.90*
Balance
€ bn
-4.77
-5.16
-5.32
-3.67
-3.61
-3.21*
Prices
CPI - average inflation rate
%
6.2
11.1
7.3
7.7
2.1
1.4
1.7
Employment
Registered unemployment
%
20.0
24.4
23.1
23.0
20.1
18.5
18.7
Average monthly gross wage
330
517
508
535
524
507
Exchange rates
RSD/USD average
77.91
73.34
88.17
85.17
88.41
108.73
Currency board fixed rate: RSD/EUR
103.04
101.95
113.13
113.14
117.23
120.67
* estimated, data for 2016 - forecast
Source: Statistical Office of the Republic of Serbia, National Bank of Serbia, IMF, Eurostat, 2016



KEY SECTORS

Serbian industry today represents a diversified mix of focus on agriculturally fruitful land and experience in manufacturing industry. Traditionally based on cooperation with Western European companies, key sectors in Serbia are base metal, food, electronics, clothing, pharmaceutical and automotive industry.

Serbia is the leading exporter of food and agricultural products in the Balkan region. Unlike other countries where food business is controlled by a few big industrial groups, Serbia’s food industry is dominated by many small companies. Serbia supplies the EU market and Russia with fresh, frozen and preserved fruit and vegetables, spirits, confectionery products and meat products. Serbia is the largest provider of frozen fruit to the French and German market and the sector is one of the few recording a trade surplus.

Automotive: Accounts for almost 10% of the entire FDI stock in Serbia since 2001. Around 60 international investors have invested over €1.7 billion in the sector, creating more than 27,000 jobs. The Serbian automotive industry supplies almost all major European and some Asian car manufacturers. The manufacturing of vehicle chassis system parts, especially tires and suspension parts is the most prominent activity in the industry, followed by electrical system components.

Shoulder to shoulder with food, production and automotive sector, ICT is becoming one of the pillars of the Serbian economy. A large number of Serbian ICT companies offer very strong technical skills that have attracted partnerships with international firms and won them a place in high-value market niches. Serbia is- home to 1,600 innovative IT Companies employing more than 14,000 people and houses Microsoft’s 4th world development centre.

Metal-processing and machine building industry is one of Serbia’s core industries with the longest manufacturing tradition and accounts for 20% of the Serbian exports. Large companies dominate the first part of the value chain, with significant economies of scale (production of primary metals, primary processing of metals), while the companies operating in the processing and manufacture of metal products subsectors are more specialized and customer-oriented SME's.


FOREIGN DIRECT INVESTMENT (FDI)

Adopted in 2002, Serbia's Law on Foreign Investments has given equal rights and obligations to both foreign and domestic investors in Serbia. Capital investments benefit from solid legal framework, tax incentives and a liberal customs regime. Since the onset of the new millennium, Serbia has grown into a premier investment location in Central and Eastern Europe. Key foreign investors include FIAT, Telenor, Stada, Microsoft, Coca-Cola, Delhaize, Michelin, Gazprom, Bosch, Siemens, Intesa Sanpaolo and many others. Nearly EUR 10 billion of foreign direct investments has arrived in the past five years. Key target sectors include financial intermediation, manufacturing, wholesale, retail and repairs.


EXPORTS & IMPORTS


The Serbian economy suffers from a constant trade deficit which is the reason why Serbian government strongly supports further industrial development of the country, especially in export oriented sectors and with a focus on automotive, electronics and ICT industries.


2015 export and import data:




Main import partners:
Germany - 12.4%
Italy - 10.6%
Russia - 9.6%
China - 8.5%
Hungary - 4.8%


Main export partners:
Italy - 16.9%
Germany - 12.5%
Bosnia Herzegovina - 8.8%
Romania - 5.6%
Russia - 5.4%


Serbia external trade - 2015



See references for our track record in Serbia.



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