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Economy of Serbia
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Serbia has an economy based mostly on various services, which account for about 63% of the GDP . In the late 1980s, at the beginning of the process of economic transition from the planned economy to the free market, Serbia's economy had a favorable position, but it was gravely impacted by UN economic sanctions 1992-1995, as well as excessive damage to infrastructure and industry during the NATO bombing in 1999.
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Serbia has an economy based mostly on various services, which account for about 63% of the GDP . In the late 1980s, at the beginning of the process of economic transition from the planned economy to the free market, Serbia's economy had a favorable position, but it was gravely impacted by UN economic sanctions 1992-1995, as well as excessive damage to infrastructure and industry during the NATO bombing in 1999. Total damage of NATO bombing is estimated at $30 billion in a detailed study done by 17 renewed economists
.
After the ousting of former Federal Yugoslav President Slobodan Milosevic in October 2000, the country went through the economic liberalization, and experienced fast economic growth (GDP per capita went from $1,160 in 2000 to $7,054 in 2008). Furthermore, it has been preparing for the membership in the European Union, its most important trading partner. Estimated GDP (PPP) of Serbia for 2008 is $80.717 billion which is $10 911 per capita. At present, main economic problems are high unemployment rate (14%) and large trade deficit ($11 billion).
Being the only European country with free trades agreements with both the EU and Russia
, Serbia expects more economic impulses and high growth rates in the coming years.
In recent years, Serbia has seen an increasingly swift foreign direct investment trend, including many blue-chip companies (US Steel, Philip Morris, Microsoft, FIAT, Lukoil, Coca-Cola, Gazprom, Lafarge, Siemens, Carlsberg...
). By countries, most cash investments in 2000-2007 period came from Austrian companies ($2.2bn), followed by those from Greece ($1.6bn), Norway ($1.6bn), and Germany ($1.4bn) . Companies from these four EU countries account for two thirds of all cash investments in that period.
More investments are expected in the future, with talks already starting with Volkswagen on possible automobile assembly, as well as with Ikea (furniture manufacturer willing to invest approximately US$2 Billion in southern Serbia) and General motors (for the construction of locomotive engines).
Macroeconomic trends
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Foreign Direct Investments
Serbia is open to foreign direct investment,
and attracting FDI is set as a priority for the government of Serbia, which provides both financial and tax incentives to companies willing to invest . Serbia has a long history of international commerce, even under communism, and it once attracted a sizeable foreign company presence, mainly due to its access to Comecon, and Non-Aligned Movement markets.
Today, leading investor nations in Serbia include: Norway, Germany, Austria, Greece . In a recent poll for investors, conducted by the German Chamber of Commerce, Serbia came on top as an investment destination in South-Eastern Europe, with 97% of companies being pleased with business conditions .
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Blue-chip corporations making investments in Serbia include: US Steel, Philip Morris, Microsoft, FIAT, Coca-Cola, Lafarge, Siemens, Carlsberg and others .
In the energy sector, Russian giants Lukoil and Gazprom have made large investments .
The banking sector has attracted investments from Banca Intesa (Italy), Credit Agricole and Societe Generale (France), HVB Bank (Germany), Erste Bank (Austria), Eurobank EFG and Piraeus Bank (Greece), and others
. U.S. based Citibank, opened a representative office in Belgrade in December 2006 .
In the trade sector, biggest foreign investors are France's Intermarche, German Metro Cash & Carry, Greek Veropoulos, and Slovenian Mercator.
Although most of investments in previous years came from the EU, there are those from other countries like India or Russia.
On September 25, 2007, the Government of Serbia and Indian firm Embassy Group signed an memorandum of understanding on information technology park construction. Embassy Group plans to build their first Technological Park in Europe at an area of 280ha in the town of Indjija near Belgrade. The five year plan predicts building a business area of 250,000 square meters and employing around 25,000 people. This is planned as the largest Greenfield investment in Serbia, accounting for a minimum of $600 million . On December 24, 2008, presidents of Serbia and Russia, Boris Tadic and Dmitry Medvedev have signed oil and natural gas deal under which Gazprom's oil arm Gazprom Neft gets a 51% stake in state-owned Petroleum Industry of Serbia for 400 million euros in cash and 550 million euros in investments. As a part of the deal, a 400-km (248-mile) leg of the South Stream gas pipeline will be built through Serbia, an investment valued at another 2 billion euros .
Currency
Currency in use: Serbian dinar = 0.0106 Euro = 0.0137 USD (Jan 2009), except Kosovo and Metohija, which uses the Euro.
| Year | USD exchange |
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| 2000 | 44.45 RSD | | 2001 | 66.66 RSD | | 2005 | 66.72 RSD | | 2007 | 58.45 RSD | | 2008 | 52.39 RSD | | Source: IMF |
Statistics
Government budget (2009):
- Revenues: 698.7 Billion RSD ($9.70 Billion)
- Expenditures: 748.3 Billion RSD ($10.39 Billion)
Source: Ministry of finance
Income (December 2008):
- Average monthly gross income: RSD 53 876, US$ 744
- Average monthly net income (tax, medicare and retirement substracted): RSD 38 626, US$ 533
Source: Statistical office, Republic of Serbia
Employment by sector (October 2008):
- Tertiary: 48.7%
- Secondary: 27.2%
- Primary: 24.1%
- Total labor force: 3.26 Million
- Unemployment rate: 14%
Source: Statistical office, Republic of Serbia
External debt (November 2008):
- Public sector: $8.49 bn
- Private sector: $19.50 bn
- Total: $27.99 bn
Source: National bank of Serbia
See also
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