Trends in target sectors

What are the most probable sectors to invest in Serbia?

Industry Focus in Europe

• Manufacturing still very strong – majority (60 %) of new jobs, favourite destinations are Russia, Turkey, Serbia.

• 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

Leading Sectors in Europe

• Automotive components and assembly – by far the 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 %)

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

Sector Specifics

• Automotive• ICT• Food• Textile• Energy• Life science

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

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.

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

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

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

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.

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

Q & A