USAID Sustainable Local Development Project November 2013

1. Trends in target
sectors
What are the most probable sectors to
invest in Serbia?

2. Industry Focus in Europe
• Manufacturing still very strong – majority (60 %) of new
jobs, favourite destinations are Russia, Turkey, Serbia.
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Manufacturing brings a long tail of services activity and employment in its wake,
generating wider prosperity. Europeans are no longer pricing themselves out of
markets, and wages are rising in emerging economies, especially for scientists,
managers and other highly skilled workers. This is creating a balance between
European manufacturers and their competitors
• Business Support Services (12 % of new jobs) mostly in
Western Europe but Poland among leaders for shared
service centers.
• Logistics (8 % of new jobs); sales and marketing; research
and development; headquarters – in all these sectors
investors prefer mostly France, UK, Germany

3. Leading Sectors in Europe
• Automotive components and assembly – by far the
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highest number of new jobs (28,4 %).
Machinery and equipment (8,6 %)
Electronics (4,3 %)
Software (4,1 %)
Plastic and rubber (3,8 %)
Food (3,8 %)
Chemicals (3,1 %)
Electrical equipment (2,8 %)
Pharmaceuticals (2,1 %)

4. Future Plans of Investors
• Research and Development – will become the engine of
future investment.
• ICT is the most critical sector driving future European
growth, followed by energy and utilities, pharmaceutical
and biotechnological industries and clean technologies.
• Further economic integration will improve future
Europe’s attractiveness

5. Sector Specifics
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Automotive
ICT
Food
Textile
Energy
Life science

6. Automotive
• Rather stagnation in WE markets, threat of overcapacity
in Germany, Japan, Korea, US, Spain and France
• Growing demand in BRIC countries, Indonesia, South
Africa, Mexico
• BRIC producers will substantially increase exports
• Eastern Europe provides best hub to BRIC producers to
enter Western European market
• New products and technologies are key to grow as well
as improved afordability of a vehicle

7. ICT
• Digital technologies are transforming economies and
investors are optimistic about the potential of ICT to
spur future European growth. Almost 50%
productivity growth is reportedly derived from ICT.
• Hardware, software and IT services in Serbia are
expected to grow by 5 – 8 % annually.
• Problems in telecommunication sector – needs to
remove barriers for expansion.

8. Food
• One of the few stable sectors in EU
• Growing demand, high export growth continued in
2012
• Estimate in Serbia:
– 2013 alcoholic drinks value sales: +3.0%; five-year forecast to 2017:
+15.0%.
– 2013 soft drinks value sales: +11.5%; five-year forecast to 2017:
+76.2%.
– 2013 mass grocery retail sales: +7.5%; five-year forecast to 2017:
+37.4%.
• Lamex acquires Mondi Serbia; Carefoor comes to
Serbia

9. Textile
• Stable growth in all segments including clothing,
textiles, footwear and luxury goods
• Italian, German, Belgian textile machinery industry
grows strongly
• Spain tries to increase its capacity in textile machine
manufacturing
• France emphasizes on waste recycling technologies
• Turkey moving well with both textile goods and
machinery manufacturing
• China is going high-trech both in textile and textile
machinery

10. Energy
• Definitely growing sector, use of renewable energy
sources
• Europe gets about half its electricity from non-fossil
energy, and wind power, for instance, will surge from
5% to 20% of capacity by 2040.
• However, many countries in Europe have pared
down financial support for green energy projects
(and without public support the projects do often not
work economically).
• Low number of new jobs, questionable benefit for
municipalities

11. Life Science
• The life sciences sector is a key growth enabler in
terms of revenue and employment in Europe. Its
growth has been nurtured by a well-developed
health care industry, with the supporting presence of
research centers, academia and sources of finance.
• It will be Europe’s challenge to dedicate sustainable
investments in research to preserve its competitive
position in order to safeguard the future profitability
of its successful pharmaceutical and biotechnology
industries.

12. Wood and furniture
• In the last decade, world trade of furniture has grown fast,
making the sector more and more global.
• Among the factors explaining this growth: market openings,
global sourcing strategies of key players and increasing
consumption in emerging markets.
• A +6% in current dollar increase in world trade is expected for
the year 2013.
• Production registered a +18% average yearly growth in
emerging countries, with leading producers China, India,
Poland, Brazil, Russia, Turkey, Vietnam and Malaysia
• The major 200 furniture manufacturers boost production in
over 1000 plants spread in all continents

13. Q&A