Introduction

In recent years, the globe’s collective memory about Serbia and the Balkans is filled with images of its turbulent past, communism and violence.

Some would even point at Serbia’s complicated past as a reason for not investing in the country. However, many years have passed since then, and by knowing just a little of Serbia, we will find that the ghosts of the past should not deter us from looking into the country’s bright future.

In fact, the latest economic data indicate that there are good chances that the recent upswing in the Serbian economy will hold, giving investors a good opportunity to get good returns if they put their money in this Balkan country.

Since the fall of communism, Serbia has opened up its economy and fostered foreign investment. The country is also a candidate member of the European Union, meaning that investing in this country could give you in the future access to a 448 million people market. However, Serbians have some benefits, like the possibility to move into any Schengen-zone country without needing a visa.

Serbia has a great economic potential thanks to its strategic location, manufacturing sector and highly educated people.

In this article we will tell you everything you need to know about this extraordinary country

A Little Bit of History

What we know as Serbia was populated in the middle age by a series of tribes in the 7th century.

In the 11th century, Serbia had a sort of golden age that lasted about three centuries. Led by the Rascia dynasty, Serbia achieved a high reputation in Europe, having an elevated cultural, political and economical esteem among the rest of the continent. This golden age ended after the Ottoman invasion in 1371. After that, Serbia would be part of the Ottoman Empire for more than four centuries.

In the 1880s Serbia would obtain independence after the wars between Ottomans and Russia. The country would form a monarchy governed by King Milan Obrenovic.

During the 20th century, Serbia suffered too many changes. Its rivalry with Austria-Hungary was the spark for WW1, it was part of Yugoslavia after the end of the war, only to be invaded and occupied again by the Germans during WW2. The first half of the 20th century was not an easy one for Serbs (or for all of Europe for that matter), and the end of the war brought a bit of much-needed stability and peace to the battered Balkan nation.

Yugoslavia was restored after the end of the war. It was led by the most powerful man of the very effective Serbian partisan guerrillas, Joseph Broz Tito, a communist leader who became the most important figure in Balkan politics during the second half of the 20th century. He ruled Yugoslavia with an iron fist. He established a very centralized and state-centered economy, a feature that still looms large in the political and economic culture of the country.

The unity of Yugoslavia, however, relied solely on Tito to keep all the factions together. After he died in 1980, the force that kept unity went to the grave with him, and Yugoslavia began a slow and painful breakup over the next two decades, which completely destroyed Serbia and its economy.

During those years, the Serbian people withstood acute hyperinflation, devastating wars, and financial isolation. Even in 2015, after more than a decade of recovery, GDP was still 27.5% below the levels of 1989. The scars of the past still mark Serbia’s international role, always striving to find a place between the West and Russia.

Nevertheless, as we said before, this is distant history. Serbia has worked hard to present itself as a country open for business and ready to take advantage of the economic opportunities of the 21st century.

After the fall of Milosevic, the country led reforms that aimed at market liberalization and regional integration that would bring back life to the Serbian economy. The reforms were partly successful, with the GDP growing by 5% on average from 2000-2008, with the 2009 global crisis dragging economic growth a little.

Why Serbia?

21 years ago, Serbia was governed by autocratic leaders that only cared about staying in power. Today, this balkan country is leading the post-pandemic economic recovery in the region and received more than 4 billion euros in FDI only in 2019.

This is what happens when conditions to foster financial freedom arise. Even though this country still has many problems, such as corruption, the government is stimulating private investment in order to boost the economy and strengthen the country’s candidacy as a European Union member. Serbia is expected to finish negotiations of joining the European bloc by 2024 and becoming a formal member by 2025.

Once Serbia becomes a member of the European Union possibilities will be limitless. Serbia won’t only have access to the European market, but also the Russian and Asian market.

This also means the possibility of Serbians to have EU passports and go to more than 150 countries without needing a visa.

Serbia is still not an advanced economy, and this means limitless business opportunities in many sectors. Look at it as a rough diamond waiting for its opportunity to shine.

Doing Business

Serbia is a promising country for those looking to expand their investment horizons, a country strategically located near both the largest single markets in the world and a regional power with an ample market to exploit.

In a nutshell, we will tell you some things you should note about Serbian economy:

-Its strategic location make it a great path between Europe and Asia, the two main markets in the world

-Recently, the government has implemented market friendly reforms in recent years, creating ideal conditions for foreign investors.

-A competitive tax system.

-Serbia is still not an advanced economy. Unlike most parts of Europe, it has thousands of economic opportunities to grow and thrive.

Serbia presents the best of both worlds: it has the economic potential of any developing economy along with an European lifestyle.

As we said earlier, the Serbian economy has shown remarkable signs of continuous growth since the fall of communism. Its GDP grew at a rate of 4.4% during 2018, with the IMF projecting a growth of 3.5% for 2019 and also 4% for 2020, with inflation also running low. Even though the COVID-19 pandemic created a recession in 2020, the GDP only contracted 1,1%. It's a little if you compare it to Spain or France, whose economies collapsed in 2020.

The Serbian economy is an export-oriented one, where manufacturing is key. The main industrial sectors in Serbia are the automotive industry, shared services sector, electronics industry, ICT industry, food industry, textile industry, wood and furniture industry, and metalwork industry. Many global corporations have created factories within the country due to its relatively cheap labor, and its strategic geographic location, some of those companies are FIAT, Microsoft, Pepsico, and Siemens.