Investment Stability
Since the onset of economic reforms in 2001, Serbia has grown into one of the premier investment locations in Central and Eastern Europe. By the end of 2009, FDI inflow in the country exceeded $20 billion, while in the past five years alone, Serbia attracted over $16 billion of inward foreign direct investment.
The list of leading foreign investors is topped by world-class companies and banks such as Telenor, Fiat, Philip Morris Mobilkom, Intesa Sanpaolo, AB InBev and many others.
Serbia's strong FDI track-record is substantiated by internationally recognized awards for local Greenfield investors. Between 2004 and 2006, Greenfield projects in Serbia were awarded by OECD for the largest investment projects of this type in South East Europe. The first Award was presented to Ball Packaging Europe (headquartered in USA), followed by METRO Cash & Carry (Germany), and Africa-Israel Corporation/Tidhar Group for their Airport City Belgrade real estate project.
INVESTOR RIGHTS
International companies in Serbia are guaranteed equal legal treatment as local ones. They are allowed to invest in any industry and freely transfer all financial and other assets, including profits and dividends.
Investment projects in the country are insured against non-commercial risks by all major national and international investment and export insurance agencies. Protection of foreign capital is further safeguarded by Bilateral Investment Treaties signed between Serbia and 33 other countries.
INTERNATIONAL INTEGRATIONS
Serbia is a full member of the International Monetary Fund (IMF), the World Bank (WB), the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), the Council of Europe, the Partnership for Peace, and other international institutions.
The EU accession is a topmost national priority for the coming years. The Stabilization and Association Agreement (SAA) with the EU was inked in April 2008. In December 2009, a formal application for the EU membership was submitted and by the end of 2012, the country's regulatory framework is to be fully harmonized with acquis communautaire.
The country also aims to join the World Trade Organization (WTO) by the end of 2010.
ECONOMIC GROWTH
In the period between 2004 and 2008, Serbia was one of the Europe's fastest growing economies. Economic growth averaged 6.3% annually, while GDP per capita almost doubled to more than €4,500. Strong GDP performance was largely driven by service sectors such as telecommunications, retail, and banking. In addition, local food, beverage, and construction industries expanded rapidly. In 2009, Serbia's economic output contracted by 2.9% or less than that of most other CEE countries as a result of a comprehensive set of state measures, including state-subsidized banking loans.
INFLATION RATE
On the monetary front, following double-digit inflation in 2004 and 2005, the retail prices increase returned to single digits in the previous two years. In December 2009, the inflation rate amounted to 6.6% relative to December 2008 due to the tight monetary policy pursued by the National Bank of Serbia.
EMPLOYMENT AND UNEMPLOYMENT
The unemployment rate based on the Labor Force Survey, conducted according to the International Labor Organization's methodology, amounted to 17.4% in October 2009. Relatively high unemployment recorded over the previous five years was primarily due to the processes of privatization and corporate restructuring.
FOREIGN TRADE
Following a 33% average annual growth between 2004 and 2008, exports in 2009 fell by 19.7%, reaching €5.96 billion. Last year's imports dropped by a rate of 28.0% to €11.16 billion. This led to €5.2 billion foreign trade deficit, which accounted for 6.2% of GDP down from 18.2% in 2008.
BALANCE OF PAYMENTS
In the course of 2009, country's external liquidity remained stable, with relatively high foreign currency reserves and a low public debt/GDP ratio. Following a sharp decline in Q4 2008, foreign currency reserves totaled €10.61 billion at the end of the last year, while the total public debt made up 31.8% of Serbia's economic output.
Inward foreign direct investment reached €1.81 billion by the end of 2009. The decline in the FDI inflow compared to the previous year resulted from the global economic downturn, adversely affecting cross-border investment projects across the world.
PUBLIC FINANCE
Public expenditures exceeded public revenues modestly over the course of 2009. As a result, Serbia's state budget ran 4.5% deficit last year.
For detailed economic data, log on the websites of the Statistical Office: www.stat.gov.rs, Ministry of Finance: www.mfin.gov.rs and the National Bank of Serbia: www.nbs.rs
