Transcript Slide 1 SERBIA ECONOMIC CENTRE OF SOUTHEAST EUROPE After the democratic changes in Serbia, the six-year period of transition was marked by the efforts.

Slide 1
SERBIA
ECONOMIC CENTRE OF SOUTHEAST EUROPE
After the democratic changes in Serbia, the six-year period of
transition was marked by the efforts to promote and develop market
economy, which includes essential economic reforms . Implementation of
such reforms was carried out with different dynamics and success in
certain stages of transition.
Generally speaking, the results of transition have enabled Serbia
to become an economic centre of the Southeast Europe.
Slide 2
Real GDP growth rates
Real GDP growth rates show that substantial progress has been
achieved in relation to the period before democratic changes and transition
reforms. Gross domestic product in the period 2001-2005 grew at the
average annual rate of 5.5%. The dynamic reforms that lasted for several
years, since 2001, resulted in the highest growth in 2004, that is 9.3%,
when the first effects of privatization were evident. In 2005, in relation to
2004, real GDP growth rate was 6.3%, while in the first six months of 2006,
in relation to the same period last year, it was 6.7%.
The Serbian economy changed qualitatively, and in 2005, service
industry became the primary generator of growth, and within it particularly:
transport, storage and communications (23.0% growth in relation to the
previous year); wholesale and retail trade (21.9%), financial mediation
(16.9%) etc. The same trend continued in the first half of 2006, but this
time transport and financial services showed more dynamic growth than
trade.
Slide 3
GDP in million USD and GDP per capita
It is evident that in the five-year period of transition, GDP grew
from 10.6 billion USD, in 2001, to 24.6 billion USD in 2005. In the same
time GDP per capita grew from 1,371 to 3,283 USD. According the
estimates of the Ministry of Finance, GDP per capita could exceed the
amount of 3,500 USD in 2006.
Slide 4
Structure of gross added value (2005)
In parallel with the growth of GDP, its structure changed. Gradually a
turn was taken from the primary and secondary sectors towards service
sector, which is one of important indicators of the overall economic progress.
In 2005, the share of services in the structure of gross added value reached
56.7%, which is much higher than in the first year of transition, but it is still
below the share they have in highly developed economies (about 70%).
The growth trend in the share of services in gross added value
continued in 2006 (expected growth in 2006 is about 1.8 %).
Slide 5
Industrial production in Serbia 2000-2006
(growth rates in %)
Industrial production has had changing dynamics in the last years.
As in all other transition economies, it was difficult to achieve
simultaneously macroeconomic stability and satisfactory production growth.
Certain stages of slowdown in growth of industrial production were
followed by falling inflation and vice versa. Nevertheless, in 2002 in relation
to 2001, there was a growing trend in industrial production (1.8%), and
inflation decreased (from 40.7% in 2001 to 14.8% in 2002).
Industrial production growth of 5.5%, in the period JanuarySeptember 2006, in relation to the same period previous year, resulted
from rise in domestic demand, which was fostered by high growth of bank
loans. The impact of rise in foreign demand was also significant, within the
context of favourable conjuncture on the world market.
Slide 6
Annual inflation rates 2000-2006 (%)
In the period 2000-2005, the lowest inflation was recorded in
2003, when it amounted to 7.8%. It was already in 2004 and 2005 that
much more dynamic growth in retail prices was recorded, 13.7% and
17.7% respectively.
The beginning of sixth year of transition was also marked by
inflationary pressures. However, restrictive measures of the NBS monetary
policy and budgetary surplus, along with the policy of strong dinar,
resulted in stopping inflationary trends in the second half of the year.
Thus, in October 2006, in relation to December previous year, inflation
amounted to 5.6%, and it is expected that at the end of this year it will
be much below the projected level of 9.3% (estimation of the Ministry of
Finance is 7-7.5%).
Slide 7
Serbian foreign trade,
2000-2006
Serbia has achieved high deficit in foreign trade. In 2004, the
deficit exceeded 7 billion USD, while in 2005 commodity trade deficit was
reduced to about 6 billion USD.
In the period January-September 2006, when Montenegro was
evidenced as a foreign market for the first time, trade deficit amounted
to 4.8 billion USD. In the same period, exports reached 4.5 billion USD,
while imports amounted to 9.3 billion USD.
High deficit and the need for dynamic development of the Serbian
economy impose the necessity of faster growth of exports in the
forthcoming period. The so far growth of the Serbian economy, which has
mainly depended on domestic demand, should be reoriented towards the
international market requirements, in order to take the challenges of
expansion to foreign markets.
Slide 8
Coverage of import by export, 2000-2006
Coverage of import by export, with certain oscillations in the
observed transition period, has not been satisfactory. In 2005,
coverage of import by export was 43.1%, and in the period JanuarySeptember 2006 it grew to 48.7%.
Although the coverage of import by export is higher in the
current year (which has been mainly caused by evidencing
Montenegro as an international market), Serbia will have to make
great efforts for a long time to change its economic structure, which
is traditionally highly dependent on import.
Slide 9
Serbian export structure,
January-September 2006
The so far structure of Serbian exports has been very
unfavourable, because the products of lower processing stage are
dominant (the share of reproduction material in overall exports in the first
nine months of 2006 amounted to 67.5%, while the share of equipment
was only 5.7%, and of consumer goods 26.8%).
To enable dynamic growth of export in the forthcoming period and
reduce foreign trade deficit, it is necessary to make structural adjustments
in accordance with the target markets requirements. Such adjustments
require the strategic approach.
Slide 10
Serbian import structure,
January-September 2006
In the structure of goods import, reproduction material is also
dominant, with the share of 63.6%, with particularly high share of oil and
oil derivatives and other sources of energy. Import of consumer goods
accounts for 21.0%, and equipment 15.4%.
To achieve accelerated development and growth of the country,
domestic producers must improve their competitive position, which requires
much higher import of new generation capital goods. In the forthcoming
period, therefore, we should expect increase in imports of equipment and
intermediary goods and certain decrease in imports of consumer goods.
Slide 11
Serbian export in the period I-IX 2006,
by major partner
In the first nine months of 2006, major export markets were: Italy,
Bosnia and Herzegovina, Montenegro, Germany and Macedonia. The value
of goods marketed on these five markets was round 2.3 billion USD, which
is 51.1% of the total exports in that period.
The strategic approach to entering new markets should contribute
to higher exports in the forthcoming period.
Slide 12
Serbian import in the period I-IX 2006,
by major partner
The major countries – partners in import in the period JanuarySeptember 2006, were: Russian Federation, Germany, EMU, Italy and
China. These five countries accounted for 4.5 billion USD, which was
48.8% of the total value of the Serbian import of goods in the first nine
months of 2006.
If we make individual analysis, the biggest import market in the
observed period was the Russian Federation, with more than 1.5 billion
USD, or 16.5% of the total Serbian import.
Slide 13
Foreign direct investments in the period 2001 –
August 2006
As the result of many-year changes towards encouraging FDIs, a
relatively high level of FDIs was recorded in some years of the transition
period : in 2003 – 1,360 million USD; in 2005 – 1,481 million USD; and in
the period January-August 2006 – 3,364 million USD. According to the
estimations of the Ministry of Finance, by the end of 2006, FDIs could
reach the value of almost 4.0 billion USD.
Further development of the Serbian economy will largely depend
on fulfillment of the political conditions, which will have impact on
continuation of negotiations on the Stabilization and Association
Agreement. The political stability will largely determine attractiveness of
Serbia for foreign investors.
Attraction of FDIs, (greenfield investments in particular) is one of
the key factors for further development of the Serbian economy, on its
way to the EU.
Slide 14
Major investors in Serbia in the period 2001 –
August 2006
Major investors in Serbia, in the period 2001 - August 2006, were
the following countries: Norway, Germany, Austria, Holland, Greece, etc.
The five mentioned countries invested into Serbia 4.9 billion USD, i.e.
62.5% of the total FDIs in the observed period.
Slides 15- 24
FDI success stories in Serbia
FDI success stories in Serbia are: „Telenor” from Norway, “Stada” from
Germany, „Tetra Pak“ from Sweden, „US Steel“ and „Ball Corporation“ from the
USA, „Credit Agricole“ from France, Brewery „Carlsberg“ from Denmark and
“Eurobank EFG Group” from Greece, etc. They have found interest in investing in
various economic activities in Serbia and achieved enviable success.
It is in the interest of further development of Serbian economy, to attract
substantial foreign capital, modern management, know-how and technological
innovations, and to use all available benefits to attract foreign capital to Serbia.
Some of the benefits already exist: favourable geo-strategic position; availability of
highly educated personnel; relatively high percentage of population with good
knowledge of English language and relatively low labour costs; laws in different
fields adjusted to the EU laws; tax and other benefits, etc.
Some very important conditions should be further promoted and created:
stable political environment, fulfillment of political conditions for continuation of
negotiations on stabilization and association with the EU, promotion of regional
cooperation, continuation of privatization process and restructuring of public
companies, achievement of long-term macroeconomic stability, equalization of the
balance of payments, further harmonization of regulations with the prevailing EU
regulations, development of infrastructure, etc.
SERBIA
ECONOMIC CENTRE OF
SOUTHEAST EUROPE
Slobodan Milosavljević, PhD
SCC President
Real GDP growth rate
10
9,3
9
8
7
6
6,7
5,2
5
5,1
6,3
4,5
4
3
2,4
2
1
0
2000
2001
2002
2003
2004
Note: * Growth rate for the first half of 2006 in relation to the same period previous year.
Source: According to Republic Statistics Office
2005
I-VI
2006*
GDP in million USD and
GDP per capita
GDP in million USD
GDP per capita
30000
4000
3518
3283
25000
2902
2478
20000
3500
26385
24600
3000
22400
1908
15000
1371
10000
18900
2000
14300
1500
10600
1000
5000
500
0
0
2001
2002
Napomena: * Procena Ministarstva finansija RS
Izvor: NBS, Ekonomski pregled, januar 2006.
2003
2004
2005
Procena
2006*
USD
Mil. USD
2500
Gross added value structure
(2005)
Agriculture,
hunting, forestry
and fishery
15.3%
Industry
24,4%
Services
56.7%
Construction
industry
3.6%
Izvor: RZS.
Industrial production in Serbia
2000-2006 (growth rate %)
14
12
11,4%
10
7,1%
8
5,5%
6
4
1,8%
2
0,1%
0,8%
0
2000
2001
2002
2003
2004
-2
-4
-3,0%
Note: * Industrial production growth rate in the period January-September 2006 in relation to the
same period previous year
Source: Republic Statistics Office
2005
I-IX 2006*
Makroekonomska stabilnost
Annual inflation rates (%)
120
113,3%
100
80
60
40,7%
40
14,8%
20
13,7%
17,7%
7,8%
5,6%
0
2000
2001
2002
2003
2004
Note: * Price growth in October 2006 in relation to December previous year .
Source: Republic Statistics Office
2005
I-X 2006*
Serbian foreign trade, 20002006
15000
Export
Import
Balance
10753
10576
9267
10000
7477
Mil. USD
5614
5000
3330
1558
4261
4515
4553
3523
2756
2075
1721
0
-1772
-2540
-5000
-3539
-4721
-6023
-4752
-7230
-10000
2000
2001
2002
2003
Note *In September, Montenegro was recorded as a foreign market for the first time.
Source: Republic Statistics Office
2004
2005
I-IX 2006*
Coverage of import by export,
2000-2006
50
48,7%
46,8%
45
43,1%
Percentage
40,4%
40
37,0%
36,9%
32,7%
35
30
25
2000
2001
2002
2003
2004
Note *In September, Montenegro was recorded as a foreign market for the first time.
Source: Republic Statistics Office
2005
I-IX 2006*
Serbian export structure,
January-September 2006
Consumer goods
26.8%
Equipment
5.7%
Reproduction
material
67.5%
Note *In September, Montenegro was recorded as a foreign market for the first time.
Source: Republic Statistics Office
Serbian import structure, JanuarySeptember 2006
Consumer
goods
21.0%
Equipment
15.4%
Note *In September, Montenegro was recorded as a foreign market for the first time.
Source: Republic Statistics Office
Reproduction
material,
63.6%
Serbian export in the period I-IX 2006,
by major partner (in million USD)
638.3
Italy
528.6
Bosnia and Herzegovina
468.5
Montenegro
460.0
Germany
212.2
Macedonia
203.9
Russian Federation
Croatia
177.2
Slovenia
172.0
France
170.2
133.8
Austria
0
Source: Republic statistics Office
100
200
300
400
500
600
700
Serbian import in the period I-IX 2006,
by major partner (in million USD)
1529.3
Russian Federation
887.2
Germany
810.8
EMU
771.8
Italy
526.3
China
317.3
Romania
273.2
Bulgaria
France
250.6
Croatia
240.4
Bosnia and Herzegovina
230.6
0
Source: Republic Statistics Office
200
400
600
800
1000
1200
1400
1600
FOREIGN DIRECT INVESTMENTS IN THE
PERIOD 2001-AUGUST 2006
(IN MILLION USD)
FDI inflow
Annual FDI inflow growth in %
4000
600
560
3500
500
3364
3000
Mil. USD
2500
300
2000
188
233*
186
200
1500
1481
1360
1000
966
100
53
0
500
0
165
475
2001
2002
-29
-100
2003
2004
Note: * Growth rate January-August 2006 in relation to the same period previous year.
Source: NBS.
2005
I-VIII 2006
Percentage
400
Major investors in Serbia
in the period 2001 - August 2006
(net investments, million USD)
Norway
193.,3
Germany
1097.1
Austria
780.4
Holland
540.2
Greece
521.8
Great Britain
290.7
France
245.8
Cyprus
208.6
Slovenia
87.9
Croatia
81.6
Slovakia 46.6
0
200
400
600
800
1000
Mil. USD
Source: NBS
1200
1400
1600
1800
2000
FDI success stories in Serbia-1
Telenor Srbija
Chief Executive Officer for Serbia
Stein-Erik Vellan
Telenor is one of the largest mobile operators worldwide with
the share in ownership of 13 mobile operators in Europe and Asia, and
with more than 100 million subscribers. In September, Telenor
celebrated a very important event – one millionth subscription, and at
the end of the third quarter Telenor provided services to 105 million
subscribers on a hundred percent basis. The figure includes 2.3 million
Telenor subscribers from Serbia. After the investment of 1.513 billion
euros, on 31 July 2006, Telenor has been operating officially in Serbia
since 1 September this year.
Only a month after having approached the Serbian market,
the company invested 15.3 million euros into new equipment, to meet
the requirements for further expansion of the network to the whole
territory of Serbia.
FDI success stories in Serbia-2
Hemofarm Vršac
Miodrag Babić,
Managing Board President:
German company Stada has purchased, within the set
time limit, 97.9 % of our company’s shares, and thus officially
become a majority owner of Hemofarm. A. D. Stada offered 485
million euros to purchase 100 % Hemofarm shares, which was
the most valuable purchase in the history of this 111-year-old
company. According to recent information, 480.4 million euros
were paid for 97.9 % shares by Stada. The tender of this German
company was evaluated as exceptionally good and favourable,
both for shareholders and further development of Hemofarm.
The Contract between Stada and Hemofarm protects completely
the vital interests of Hemofarm, i.e. its brand, the seat of the
company remains unchanged, the same social responsibility for
the employees will be maintained, etc.
FDI success stories in Serbia-3
Tetra Pak - Sweden

Licensed production in Serbia since 1960s

Acquisition was carried out in 1997

Export oriented to the EU and Russia

One of five most productive factories in Europe (out of 15)
Mr. Nelson Falavina,
Managing Director:
During his 16-year employment in the
company Tetra Pak, he worked on sale,
marketing and management.
He came to Serbia in January 2006, from
Tetra Pak-Venezuela, where he occupied
the post of Managing Director. Today he is
responsible for Tetra Pak Balkan, which
covers the markets of Romania, Bulgaria,
Moldova, Macedonia, Republic of Srpska
and Serbia.
FDI success stories in Serbia- 4
US Steel - USA

Sept 2003 – The greatest steel mill in Serbia emerged
through acquisition of a bankrupted company.

Turning point in business occurred in 2004.

In 2005, the company U. S. Steel Serbia was proclaimed
the best Serbian exporter.
Mr. Douglas R. Matthews,
General Director:
“Our employees have been
efficiently trained in the field of
continued promotion of safety at
work, product quality, consumer
services, environmental protection
and cost reduction.”
FDI success stories in Serbia-5
Ball Corporation – USA
Mr. Anthony Barnett,
Director
Photo by AmCham Serbia
 Regional centre – manufacturing of equipment for
aluminum cans
 Foundations were laid in May 2004, production started in
May 2005
 Greatest Greenfield investment in the Region in 2003,
OECD award
FDI success stories in Serbia-6
Crédit Agricole

Meridian Bank - member of Credit Agricole Group, the second
biggest bank in the world by capital value.

Objective: Leadership in retail banking, SMEs and
transactions with the business sector

Božidar Djelić, Meridian Banke A.D. Managing Board President
Tomislav Đorđević,
General Director:
“Owing to the partnership with Credit
Agricole, Meridian Bank will be in the
position to speed up its development and
offer the clients throughout Serbia
complete services and products. "
FDI success stories in Serbia-7
Carlsberg - Denmark
In September 2003, the decision was reached to buy the
majority package of shares (51%) in Čelarevo Brewery.
Mr. Boguslaw Bartczak,
CEO Carlsberg Čelarevo Brewery:
“In the first eighteen months
after acquisition of the Čelarevo
Brewery,12 million euros were
invested into modernization
of production facilities,
promotion of our brand,
expansion of distribution
network, promotional campaign
and local utility projects. We are particularly proud of threemillion-euro worth production line for PET bottling of beer,
with the capacity of 8,200 PET two-liter bottles per hour.”
FDI success stories in Serbia-8
National Savings Bank
Dr.Georgios
E.Lychnos,
Director
National Savings Bank – the bank was established in
2002. as a joint-stock company. In September 2005,
Eurobank EFG Group, the most dynamic bank in the
Southeast Europe Region, became the owner of the majority
stake. In March 2006, Eurobank purchased the Government
package of shares and thus became the owner of the entire
National Savings Bank.
On the takeover of this prosperous domestic bank,
the leaders of Eurobank EFG Group committed themselves to
place innovative products and high-quality services at the
disposal of the National Savinks Bank’s customers. This has
been confirmed by the offer of Euro BONUS saving to the
owners of old citizens’ foreign exchange savings bonds.
Major investors in Serbia
Company
Country of origin
Norway
USA
Germany
Value
(mil. EUR)
Activity
Form of investment
Telecommunications
Privatization
1513
Privatization
518
Acquisition
480
Acquisition
326
Tobacco
Pharmaceuticals
Belgium
Beer
Italy
Banking
Russian
Federation
Oil
Privatization
210
Switzerland
Cement
Privatization
185
USA
Steel
Acquisition through
liquidation
150
France
Cement
Privatization
126
Greece
Cement
Privatization
94
Great Britain
Tobacco
Privatization
87
USA
Packaging
Greenfield
80
Austria
Household cleaning
agents
Privatization
70
Germany
Floor coverings
Joint venture
67
Denmark
Pivo
Acquisition
Acquisition
277
53
Foreign Banks in Serbia:
 ALPHA BANK A.E.
 BANCA INTESA
Green field investicija
kupovina domaće banke - Jubanka
kupovina domaće banke- Delta banka
 CREDIT AGRICOLE
kupovina domaće banke - Meridian banka
 EFG EUROBANK A.D.
 ERSTE BANK
Green field investicija
kupovina domaće banke - Nacionalna štedionica i Post banka
kupovina domaće banke - Novosadska banka
 HVB BANKA A.D.
Green field investicija
kupovina domaće banke - Eksim banka
 HYPO ALPE-ADRIA-BANK A.D.
 LHB BANKA
Green field investicija
kupovina domaće banke Prva preduzetnička banka
 NATIONAL BANK OF GREECE S.A.
 NOVA LJUBLJANSKA BANKA
 PIRAEUS BANK
Green field investicija
kupovina domaće banke - Kontinental banka
kupovina domaće banke - Atlas banka
 ProCredit BANK A.D.
 RAIFFEISENBANK A.D.
Green field investicija
Green field investicija
 SOCIÉTÉ GÉNÉRALE YUGOSLAV BANK A.D.
 VOLKSBANK A.D.
kupovina domaće banke - Trust banka
Green field investicija
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