The Republic of Serbia has passed through a period of dramatic change, managing a rapidly evolving political and economic environment since the first agreement of principles governing the normalisation of relations with Kosovo signed in April 2013. Now landlocked, Serbia has a land mass of 77,500 square kilometres located in the central region of the Balkan Peninsula of Southeast Europe. It shares borders with Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Hungary, Kosovo, North Macedonia and Romania. Serbia has a population of 8.74 million and its capital Belgrade, located at the confluence of the Sava and Danube rivers has a population of 1.39 million and is one of Europe’s oldest cities.
Serbia is a candidate country for membership of the European Union (EU) reflecting the significant progress made so far in structural, economic and institutional reforms. The Government’s economic reform program focuses on ensuring economic and financial stability, halting debt accumulation and creating an environment for economic recovery, investment and growth to foster employment, and raise living standards. GDP growth for 2018 was 4.4 per cent, inflation was within target and the budget remained in surplus for the year helping to further lower the public debt burden.
The Serbian economy is expected to continue with solid growth of around 3-4 per cent over the medium term, although growth in 2019 is expected to slow to 3.5 per cent (World bank) as the effects of the increase in consumption and investment were to a large extent exhausted in 2018. Future investment and exports will be the main drivers of ongoing growth. Serbian authorities have the support of the EU and of the international financial institutions to modernise their infrastructure and support investment in the business community.
Serbia has a workforce of over 3 million with around 57 per cent employed in the services sector which contributes 50 per cent of GDP. Tourism, as part of this sector will continue to develop and is expected to make a larger contribution to GDP than the 3.2 per cent made in 2018. The agricultural sector contributed 6 per cent of GDP and the industrial sector, 26.4 per cent. Serbia has significant quantities of coal, lead, zinc, copper and gold but lack of investment has affected the mining sector for several years, preventing the country’s economy from fully realising the benefits of this wealth.
Economic Indicators – 2018
Foreign Direct Investment (FDI) in Serbia
The Government of Serbia is committed to developing a stable and predictable business climate by implementing regulation which grants foreigners the same rights as its citizens to conduct business, with the benefits of a free market, favourable tax regime and investor incentives. These benefits include:
- Regulation on Conditions and Methods of Attracting Direct Investment;
- The Stabilization and Association Agreement between the Republic of Serbia and the EU was brought into force on 1 September 2013. It guarantees the alignment of national legislation with EU laws making conditions for investment and business more recognisable and predictable for foreign investors;
- The Government may make cash grants available to investors to offset initial capital investment and foster start-ups businesses;
- Corporate tax rate is 15 per cent. However, a 10-year corporate profit tax holiday is available to investors who hire more than 100 employees and invest over 8.5 million EUR;
- Government or local municipalities can sell construction land at lower than market prices in support of investment projects;
- Competitive operating costs for companies including taxation, utility services and transportation;
- Availability of high quality multi-lingual labour at regionally competitive costs; and
- Republic of Serbia has 54 effective double taxation agreements in place that cover income, capital and property.
Tourism in Serbia
Serbia is an emerging tourism market with 3.5 million tourists in 2018 of which half were international visitors. Belgrade and Novi Sad with their heritage buildings, lively cafes and night clubs attract two thirds of international arrivals while Serbian tourists favour the mountain and spa destinations.
Serbia’s landscapes range from the endless plains of Vojvodina in the north, the country’s breadbasket and wine cellar to the dramatic mountains and gorges of the national parks in the south, west and east of the country. Large numbers of tourists are attracted to the west with the Ovčar-Kablar gorge, towns of Čačak and Užice, and Zlatibor, one of the biggest Serbian tourism centres with its scenic natural environment, traditional mountain food, and picturesque ethnic villages. Further west is the spectacular Tara National Park and to the south, one of Europe’s most beautiful canyons – the canyon of the river Uvac.
The overlapping influences of past empires dating back to the Byzantium that occupied Serbia have contributed to an intriguing cultural diversity that pervades the country. It’s north leans to the profile of Central Europe while the south is characteristically of the wider Balkans and even Mediterranean. In addition to the many fortresses and heritage buildings, Serbia has five particularly significant cultural monuments with UNESCO World Heritage listing.
Serbia maybe landlocked but three of its major rivers are fully navigable – the Danube, Sava and the Tisa with luxury cruising of the Danube very popular with international tourists. During winter, Serbia’s 26 snow skiing resorts are in action. Rani Kopaonik at an altitude of 1,700 metres is the most popular and stays open after the snow melts attracting outdoor enthusiasts to explore the national park on foot or mountain bike.
Tourist Arrivals over past 5 Years
Accommodation Profile – 2017 & 2018