Invest in Serbia

Post-1989 turmoil

Serbia's history after 1989 has hewed much closer to Russia's than to its more prosperous Eastern European cousins. Which is to say, the multiethnic state Serbs once dominated has shattered, despite enormous ethnic bloodshed and warfare on the part of Slobodan Milosevic. Its economy has been alternately looted by mobsters and cannibalized by warfare among mutually loathing ethnic groups. Between the three major Yugoslav states (Croatia, Bosnia, Serbia), Serbia is by far the poorest, with a per capita income of under $7500US, and its GDP ($54 billion) is fifteen percent less than Croatia's ($68bn), even though Serbia's population is more than twice Croatia's.

After Milosevic

After Milosevic was overthrown by the Serbian Democrats in 2000, Serbian nationalism did not go away; on the contrary, the secessions of Kosovo and Montenegro inflamed Serbian nationalist sentiment. The Serbian Radicals (the more radical partner of Slobodan Milosevic's socialist/nationalist government) staged a huge comeback and very nearly won the election of January 21, 2007. Fortunately for Serbians in general and the Serbian investment climate in particular, a coalition of pro-European parties defeated the Radicals, swallowed Serbian pride, and effectively accepted the secession of Montenegro.

Pro-European future

While significant political tensions remain (notably pro-reunification sentiment among Serbs in neighboring Bosnia), it is unlikely that pro-war, pro-unification, anti-investment sentiment will return to the level which almost won the Jan. 21, 2007, election. Serbia currently represents a high-risk, higher-return investment opportunity for investors who can withstand a fairly unstable political environment. Its annual economic growth was approximately 6 percent for both 2005 and 2006. In the medium to longer term, Serbia's course is one of economic and political integration within the European Union. Its current economic weakness means high marginal returns on investment, and the "Balkan tiger" should be seen as a major opportunity for less risk-averse investors.