Developments and perspectives in the metal industry of Serbia

In the past decade, 2001-2011, Serbia had significant economic growth up until 2008 and a very impressive inflow of foreign direct investment and credit. Subsequent to 2008, however, due to the global crisis, and not the competitive structure of the domestic economy, Serbia was faced with a problem of falling exports, non-trading of goods and a lack of liquidity. The largest negative effects of the crisis have been caused to industry (a decrease of 12.1%), especially manufacturing (a decrease of 15.8%) where the growth between 2001 and 2008 has been completely wiped out, trade (12.3%) and construction (25.1%). These adverse effects have led to crisis in the Serbian economy in conditions of high domestic demand and a high current account deficit. The result of the significant reduction in foreign capital inflows, the slowdown in lending activity and the major decline in wage growth was a decrease in domestic demand (8.4%). This drastic drop in demand, with an impact that was felt both in personal consumption and in production activities, has influenced a reduction in foreign trade, especially in imports (down 28%, while the export of goods is down 20%), resulting in an improved balance of payments in the current account. The deficit of EUR7.0bn in 2008 decreased to EUR2.1bn in 2009 (from 21.2% of GDP to 6.9%). In the second half of 2009 and in 2010, however, economic activity in Serbia has stabilised under the influence of a number of incentives. Serbia has achieved an average GDP growth rate of 4.4% over the past ten years. Abstracting the negative impact of the global economic crisis, the GDP growth rate has been relatively high (5.4% in 2001-2008.) However, this does not fully reflect the state of economic activities in Serbia: the extremely low base in the years preceding the transition period can mean that GDP growth appears over-large. Reprinted by permission of Nomos Verlagsgesellschaft