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American investors view Serbia positively, highlight opportunities at Expo 2027 amidst persistent challenges

American investors have a generally positive view of doing business in Serbia, benefiting from equal conditions and various programs designed to attract foreign direct investment (FDI), according to the latest U.S. State Department report on the investment climate in Serbia.

The report highlights that American companies see significant potential in Serbia, particularly with the upcoming Expo 2027 in Belgrade, which is seen as an opportunity for American firms to supply technology, equipment, expertise, and consulting services. The costs associated with construction, operations, and supporting projects (such as hotels) are expected to exceed two billion dollars.

The State Department report points out that Serbia’s strategic location, well-educated English-speaking workforce, competitive labor costs, generous investment incentives, and trade agreements with the EU and other key markets contribute to its favorable investment climate. Recent macroeconomic reforms, financial stability, and fiscal discipline have modestly improved the investment environment.

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However, challenges persist, including bureaucratic delays, corruption, loss-making state-owned enterprises (SOEs), a large informal economy, and inefficient judiciary. Political influence on the economy remains a concern, highlighted by the government’s sudden withdrawal of licenses for a major lithium mining project in response to public protests.

Despite these issues, the State Department notes that Serbia has made progress in addressing problematic SOEs through bankruptcy or privatization and is working to reduce bloated public sector employment.

The report also mentions the impact of Russia’s invasion of Ukraine, which initially had limited economic effects on Serbia. While inflation rose due to higher energy import prices, it has been decreasing since its peak of 16.2% in March 2023. Serbia’s inflation rate dropped to 5.6% by February 2024. The disruption in oil supplies due to EU sanctions has led to a significant reduction in Serbian imports from Russia, while exports have remained relatively stable.

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Overall, the U.S. State Department views Serbia as an increasingly favorable destination for American investment, provided that ongoing challenges are managed effectively.

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