Serbia and Montenegro Business Forecast Report Q1 2009

Publication Date	November 2008
Publisher	Business Monitor
Product Type	Report
Pages	83
ISBN Number	not applicable
Product Code	BMI03046

Buy this product or for assistance call +44 20 7060 7474

PDF £250.00$416 | €280

FAX Order above formats by FAX

Summary

Weathering The Storm

We anticipate the sustained turmoil in international financial markets and worsening global economic outlook to weigh on the Serbian economy in 2009. In particular, we forecast growth to slow to 3.4%, from a projected 5.7% in 2008. However, as the outlook for the external environment improves beyond 2010, we expect growth to once again tick up, peaking at 5.1% in 2012. With all key political actors committed to EU membership, privatisation and the introduction of reforms to improve the business environment, we believe that the longerterm outlook for the Serbian economy is positive. Nevertheless, we caution that Kosovo's unilaterally declared independence will continue to pose an elevated risk to the country at least through the medium term.

We expect that the referral of the Kosovo issue to the ICJ will have a positive impact on Serbian development in the medium term. As the ICJ is expected to take between one to three years to deliver its ruling on the issue, this will allow the Serbian government to shelve the issue of Kosovan independence during this period. A breather from this issue, will enable the government to push ahead with political, economic and business environment reforms. Not only will this help the country's bid to become an EU member, it will also help to attract foreign investment which will support economic growth.

The government's plan to push ahead with privatisation is a positive sign that it is keen to improve the country's attractiveness to foreign investors and that it is trying to lay the foundations for longterm stable economic growth. Nevertheless, we believe that progress with privatisation is likely to remain largely stalled until at least 2010, when both eurozone and US growth is expected to tick up. In addition, while the government's privatisation plans are innovative, there are several factors which are likely to put off foreign investors.

Germany's Metro Group plans to expand its Serbian cash and carry store network through new store openings. Metro opened its first store in Serbia in 2005 with a US$18mn investment, and now has five outlets in the country. The company has indicated that it will work with local manufacturers and producers to supply its Serbian stores, with about 80% of Metro's Serbian food products to come from domestic suppliers. While there are still a number of factors that make Serbia a difficult country in which to operate, including stilllow disposable incomes, the prevalence of corruption and the poor state of the country's infrastructure, we believe the country has potential over the longer term.

Content

Executive Summary
Weathering The Storm
Chapter 1: Serbia Political Outlook
- Swot Analysis
- Bmi Political Risk Ratings
- Domestic Politics
- Economic Downturn: Limited Impact For Political Stability
- While The Global Economic Downturn Will Pose A Risk To Government Stability Across The European Region, We
- Believe That The Serbian Government Will Emerge From The Crisis Relatively Unscathed
- Foreign Policy
- Referral To Icj Will Improve Stability
- We Believe President Boris Tadics Bid To Seek A Ruling From The International Court Of Justice On Kosovos Unilateral
- Declaration Of Independence Will Allow Serbia To Concentrate On Political And Economic Reforms Necessary For
- Eu Membership In The Medium
List Of Tables
- Table: Serbia Political Overview
Chapter 2: Serbia Economics Outlook
- Swot Analysis
- Bmi Economic Risk Ratings
- Economic Activity
- Economic Growth Will Slow In 2008 And 2009
- We Have Revised Down Our Serbian Economic Growth Forecast For 2008 And 2009 To 5.7% (From 6.5%) And 3.4%
- (From 6.3%) Respectively
List Of Tables
- Table: Economic Activity
- Investment Climate
- Privatisation: Right Idea, Wrong Time
- While It Is A Positive Sign That The Serbian Government Has Fleshed Out Privatisation Plans For 2009, We Believe
- The Likelihood Of These Succeeding Is Slim
- Fiscal Policy
- Foreign Investment To Subside
- While We Expect The Swathe Of Fiscal And Monetary Measures And Incentives Announced By The Serbian Government
- To Shore Up Investor Confidence In The Economy, We Caution That The Risks To The Macro Stability Of The Serbian
- Economy Are Increasing
List Of Tables
- Table: Fiscal Policy
- Monetary Policy
- Risks To Outlook
- We Believe That The National Bank Of Serbias October 31 Decision To Raise The TwoWeek Repo Rate By 200bps
- To 17.75% Was Driven By Concerns Over Persistent Inflation And Downside Pressures On The Dinar
List Of Tables
- Table: Monetary Policy
- Chapter 3: 10Year Forecast
  - The Serbia Economy To 2018
  - Eu Convergence Key To 10Year Growth Outlook
List Of Tables
- Table: LongTerm Macroeconomic Forecasts
- Chapter 4: Serbia Business Environment
  - Swot Analysis Serbia
  - Serbia Business Environment Outlook
List Of Tables
- Table: Bmi Business And Operational Risk Ratings
- Institutions
- Infrastructure
- Market Orientation
List Of Tables
- Table: Europe, Fdi Annual Inflows
- Table: Bmi Trade Ratings
- Operational Risk
- Chapter 5.1: Montenegro Political Outlook
  - Swot Analysis
  - Domestic Politics
  - Domestic And Regional Instability Ahead
  - We Believe Montenegros Decision To Recognise Kosovan Independence Will Have A Positive Impact On The
  - Countrys Bid For Membership Of Key EuroAtlantic Institutions
List Of Tables
- Table: Montenegro Political Overview
- Chapter 5.2: Montenegro Economic Outlook
  - Swot Analysis
  - Economic Activity
  - Major Risks To Macroeconomic Stability Ahead
  - We Believe That The Turmoil In The Global Financial System Will Lead To A Significant Reduction In Capital Inflows To
  - Montenegro
List Of Tables
- Table: Economic Activity
- Chapter 5.3: Montenegro Business Environment
  - Swot Analysis
  - Montenegro: Business Environment Outlook
  - Business Environment Swot Analysis
List Of Tables
- Table: Bmi Business And Operational Risk Ratings
- Table: Bmi Legal Framework Ratings
- Table: Europe, Fdi Annual Inflows
- Table: Bmi Trade Ratings
- Chapter 6: Regional Outlook
  - Regional Outlook: 1
  - Strategic View: Demand Destruction Key For Negative Outlook
  - A Significant Demand Slowdown In Both The Us And Eurozone In 2009 Will Dramatically Impact The
  - Economies Of Central And Eastern Europe
  - Regional Outlook: 2
  - Crisis Potential: Wheres The Risk?
- Chapter 7: Special Report
  - Why The Us Can Remain World Superpower
  - Wealth Is Shifting East
  - The Uss Current Financial Woes Will Not Necessarily Undermine Its Position As A Global Superpower
List Of Tables
- Table: Geopolitical Power Index
- Chapter 8: Key Sectors
  - Serbia Pharmaceuticals
List Of Tables
- Table: Serbia Generics Market Indicators, 20042012
- Chapter 9: Bmi Global Assumptions
  - Global
List Of Tables
- Table: Global Assumptions