Former Serbian president Boris Tadic was defeated in the country's May election by nationalist candidate Tomislav Nikolic. The defeat was widely regarded as a reaction by the Serbian population to the country's poor economic situation. Serbia is struggling with a 23% unemployment rate (up from 14% in 2008) and the International Monetary Fund (IMF) forecasts that the country's GDP will grow by only 0.5% in 2012.
Mr Nikolic is known for his hard line against Kosovo's bid for independence, as well as for keeping a closer relationship with Russia than the EU, which could potentially deter Western investors from entering the country. However, experts say that the current state of the Serbian economy makes Mr Nikolic more likely to adopt a pro-business and pro-investment stance.
“Mr Nikolic has clearly demonstrated his strong commitment towards Serbian integration with the EU and his willingness to resolve any disputes by political dialogue,” said Dr Vladimir Krulj, CEO of the Atlantic Council in Serbia and vice-president of the Danube Business Council.
During his first comments after his presidential victory was announced, Mr Nikolic said that Serbia is going to stay on “its European path” and that he aims to end “the partisan oligarchy”.
According to Mr Krulj, such words will have to be followed quickly by actions. “Serious change is needed if Serbia is to improve its investment climate. Removal of the administrative barriers to market entry, reform of the justice system and the elimination of corruption are top priorities for business,” he said. "While it remains to be seen how Mr Nikolic will tackle these issues, it is clear that he is doing more than anyone to re-establish negotiations with the IMF”.
If negotiations were re-established the $1.37bn IMF loan, which was postponed in January 2012 due to concerns over the Serbian budget, could serve as a catalyst to the country's recovery. FDI inflows could also help boost the country's economy. Foreign investment was up in 2011, with $1.82bn invested in the country – a significant increase from 2010 and 2009. However, this figure was still well below the record $5.23bn that was invested in 2008, according to greenfield investment monitor fDi Markets.