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Successfully investing in Serbia

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last updated on 19 May 2021 | reading time approx. 2 minutes

 

 

 

How do you assess the current economic situation in Serbia?

According to the National Bank of Serbia (NBS) and International Monetary Fund (IMF): in 2020, the Serbian economy reported a negative growth balance of 2.5  per cent – compared to 4.2 per cent in 2019, due to the negative economic effects of the Covid-19 pandemic. Nevertheless, this is a relatively low economic contraction, with Serbia being among the least affected by the Covid-19 pandemic in Emerging Europe (OECD).
According to the IMF's October 2020 forecast, growth is expected to resume in 2021, estimated at 5.5  per cent of GDP and 6  per cent in 2022.

Serbia's unemployment rate, relatively low compared to its neighbors in the Balkans, remains significantly higher than the European average. This trend has been heavily influenced by the negative economic impact of the Covid-19 pandemic, the rate increased to 13.4 per cent in 2020 from 10.9 per cent in 2019.

From personal point of view it seems that IT services are growing. The need for accountants and accounting services are also high, while touristic services are in depression.

 

How would you describe the investment climate in Serbia? Which sectors hold great potential?

The World Bank Report revealed that Serbia improved the business climate in the past few years. Serbia is gradually becoming more open to international trade (110 per cent of GDP in 2018, according to World Bank). The Stabilisation and Association Agreement between the EU and Serbia and the steady growth of foreign direct investment inflows have led to a constant increase in the volume of foreign trade.

Serbia's negotiations with the WTO are advanced. The country’s main exports are insulated electric conductors, motor vehicles, tyres and iron; whereas imports are led by crude oil, parts of motor vehicles, medicaments and petroleum gases.

Growing IT sector could not be underestimated while agriculture are still source on which one could rely.

 

What challenges does a German entrepreneur face when engaging in Serbia?

In business it seems that German companies are working together with Chinese companies in several industries and regions in Serbia. As example, in the Western Serbia (in the city of Loznica) Chinese investor is building a factory of batteries in which several huge German companies took part. Also, several companies from EU are working to the main Russian investment in Serbia – Gazprom owned Oil Industry of Serbia.

Therefore, there are so much possibilities and there will be jobs for everyone. On the other hand, speaking about Employers and employment, German companies are preferred as employer in relationship with Chinese or Russian companies.

To conclude, apart from political differences, which are huge, from business side there is joint approach in doing business in Serbia.

 

Germany is Serbia's most important trading partner worldwide. Russia and China also have their eyes on Serbia. What does this mean for German engagement?

There is proverb in Serbia, “first come, first served”. However, there is big problem to determine who came first. Is it first Germany whose miners gave the strength to the medieval kingdom of Serbia, and which knights did the core of the armored force? Or it was Russians, with whom Serbs shares the religious and cultural connections and without help from them there would be no independent Serbia in 19th century? In reality in Serbia, there are many people who can have all. Most of the families nowadays have some member in Germany or in other countries of EU, but there are too many who did work in Russia and get enough to send youngsters to the Germany/EU.

So, we do not see any problems in doing business there. Also, investment in Serbia has be great if the idea is to export products made in Serbia to the Russia, under the Free Trade Agreement between Russia and Serbia. 

 

In your opinion, how will Serbia develop?

As mentioned earlier, Serbia is trying to harmonise its legislation with EU. However, in 2020 no new Chapters were open. Plans made by President of Serbia to have Serbia become a member of EU by 2025 while still maintaining strong ties with Russia and China seems that failed. Another plan, creation of the Zone of Free Trade between former Yugoslav Republics which are not in EU and Albania is growing slow but steadily.

In general, Serbia will develop toward EU even in case where membership is far away.

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