CEEMEA Business Group
Serbia:
business and economic outlook, 1st part
According to our December 2014 corporate survey, Serbia ranks at No 9 in terms of revenue growth
forecast for 2015, better than Croatia, Slovenia and Bosnia, but it ranks at No 15 in terms of profit
growth forecast in 2015.
EXECUTIVE SUMMARY
2014 was somewhat better for business than 2013 - 74% and 64%
of companies had revenue and profit growth in 2014 respectively,
while others either declined or stagnated. According to our December 2014 corporate survey, Serbia ranks at No 9 in terms of
revenue growth forecast for 2015, better than Croatia, Slovenia
and Bosnia, but it ranks at No 15 in terms of profit growth forecast
in 2015, still better than Croatia and Bosnia.
74% of multinationals expect revenue growth in 2015 (15% in double digits); 79% expect profit growth this year, mostly in single digits; 29% of companies reported downtrading to cheaper brands
(the 6th worst score in CEE); 14% of companies reported problems
with collecting receivables (the 10th worst in CEE). In 2015, 7% of
companies plan to cut headcount, 10% of firms plan to cut sales/
marketing expenditures, while 17% of companies plan to change
the route-to-market.
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According to preliminary estimates, real GDP contracted by 2% in
2014, due to devastating floods which affected electricity generation, mines and agriculture, and suspended production at some
manufacturing plants, thus causing €1.5bn of estimated damage.
We expect another shallow recession in 2015 of -1.4% due to the
austerity program (see later), with downside risks.
Corporate sales and domestic demand will have many headwinds
in the coming 18 months and companies should count on softer
demand in 2015 and possibly 2016 too. First, pensions and public
sector wages were cut by around 10% in November 2014. Second,
subsidies for loss-making state firms will be cut, causing a further
increase in registered unemployment (currently, there are some
750,000 of officially unemployed). Third, the new law on privatization has passed the parliament and will cause a further rise in unemployment as new owners start shedding labour in 2016. Fourth,
the fear of unemployment and cuts in wages will keep consum-
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