Serbia one of emerging Europe's better performers since pandemic - Fitch expert

NEW YORK - Since COVID-19, Serbia has been one of emerging Europe’s better performers, according to Paul Gamble, senior director in the Sovereign Group at Fitch Ratings, who notes that the Serbian government had "rationalised spending, enabling it to reduce debt, which has been backed up by strong growth and investment."

"The FDI story is a good one, with inflows typically equivalent to 5 pct to 7 pct of GDP, while the business operating environment is positive,” Gamble told the US-based Global Finance magazine.

"Serbia’s success story dates further back than post-Covid. Over the past 15 years, Belgrade has followed a successful program of economic reform that has helped overhaul one of Southeast Europe’s more moribund economies. It has diversified away from light manufacturing and agribusiness - the traditional mainstays of its economy - toward information and communication technology (ICT), the information economy and new technologies," Global Finance said.

Gamble said ICT was now Serbia's fastest-growing sector, boosted by an inflow of an estimated 200,000 young Russians following the outbreak of the war in Ukraine.

"Indeed, Russian and Ukrainian business registration in Serbia has jumped dramatically since Moscow’s invasion of its neighbor, with young professionals clearly wanting to avoid the war and benefit from Serbia’s EU links. According to the Serbian Business Registers Agency, some 1020 Russian-owned companies were established in Serbia in 2022, against just 82 in 2021," the magazine said.

"Energy is another fast-evolving sector, with Serbia keen to reduce its use of inefficient and polluting lignite (which currently accounts for 70 pct of energy use), boost green energy and reform its loss-making energy monopolies. In March, PM Ana Brnabic unveiled plans to convert state-owned energy utilities Elektroprivreda Srbije and Srbijagas into joint stock entities, and then shift the focus to the loss-making state-owned railway companies."

Serbia’s growth has been helped by large-scale investment in roads and other infrastructure and by huge inflows of FDI - some 42 bln dollars since 2007 and some 4.3 bln dollars last year alone, the magazine said, citing figures from the Development Agency of Serbia (RAS).

"Much of that has come from the EU, especially into the auto and food industries, with European Commission President Ursula von der Leyen committing to supporting further investment in Serbia (and other East Balkan countries) during a visit in early November."

"All this has helped underpin rising living standards and is transforming Serbia’s international reputation as a magnet for investment. With good connections to its neighbours, its labour is cheaper than Croatia. And the country is much less volatile than Bosnia, North Macedonia or Albania, with one of the most proactive foreign investment agencies," Global Finance also said.