Private Briefing January 2025

No. 142 | Year XII

Private Briefing traditionally, for the 12th consecutive year, begins the new season with a trilogy of analyses on the macroeconomic framework of business operations, focusing on the global level in the first instalment. In the following editions, the trilogy continues with analyses of the local macro framework and concludes with an analysis of the financial sector. From the current support programs, the January issue brings an analysis of another RAS support model for entering new markets, as well as two calls from the Provincial Secretariat for Economy: one for improving tourism and another for purchasing machinery and equipment for SMEs and entrepreneurs.

// The Provincial Secretariate for Economy and Tourism of AP Vojvodina has announced a new call for comprehensive improvement of the tourist offer in the Province. This call aims micro and small businesses and entrepreneurs in hospitality sector, whether they provide accommodation services or services of preparing and serving food and drinks. The total amount of allocated funds has been significantly increased to as much as 500 million dinars this year, which represents a strong incentive for the development of the tourism sector in Vojvodina. The eligibility criteria assume that the applicants are registered in the territory of the Province and that they perform their activity there, whereby for applicants who perform accommodation activities it is also necessary that the facility is registered with the Ministry of Tourism or the local self-government unit (through E-tourist platform).

// The call addresses a wide spectrum of supported activities, including construction, extension, reconstruction, adaptation and rehabilitation of hospitality facilities, procurement of equipment, introduction of technological innovations, as well as investments in energy efficiency and ecological sustainability. A novelty in this call is support for the procurement of electric and hybrid vehicles, which additionally encourages the development of eco-tourism and ecological awareness in the sector. The amounts of support are ranging from 300.000 to as much as 4.500.000 dinars per project, depending on the purpose. Grants are intended for co-financing up to 80% of eligible costs for most purposes, which makes this programme extremely appealing. The call also introduces flexibility regarding the project implementation, enabling reimbursement of costs for projects realised from the beginning of 2024, and advance financing for projects that will be realised by the end of May 2025. This provides significant manoeuvring space for users in planning and realising investments. The eligibility criteria are adjusted to encompass a wide spectrum of businesses in the tourism sector, with the requirement that they are registered by the end of 2024 and that they have at least one permanent employee. 

// For potential beneficiaries with a vision and ambition to improve their business in the tourism this call comes as an exceptional opportunity. The focus on energy efficiency, digitalisation, and service quality aligns with current market demands while the financing structure enables significant investments in key elements of the offer, which can result in long-term increases in revenue-generating capacity and sustainable development. Given the high co-financing percentages and the variety of supported activities, this call can be considered one of the most attractive support instruments for the tourism sector in Vojvodina, from which high-quality project proposals can gain substantial benefits.  

Macroeconomic Framework: Global Developments, Trends, and Expectations

// The past year was marked by a shift from “AI” as the dominant concept of 2023 to “Resilience” as the defining keyword for 2024. This transition signifies much more than a mere change in terminology; it reflects an evolution in the global economic paradigm. While “AI” symbolised a technological approach to addressing challenges through advanced information processing, “Resilience” embodies the capacity of economies to adapt and thrive despite ongoing challenges. This shift highlights a move away from purely technological solutions towards a more comprehensive approach to economic stability and growth, aiming to integrate identified technological trends and emerging opportunities into managed and strategic development. In line with this new “keyword,” the global economy demonstrated significant resilience in 2024, achieving stable growth of 3.2%, despite geopolitical tensions and trade disruptions that, at times, exceeded the scale of challenges seen in recent years. The International Monetary Fund (IMF) projects this trend to continue, forecasting global growth of 3.3% for both 2025 and 2026. Although this growth rate falls below the historical average of 3.7% recorded between 2000 and 2019, it represents a notable recovery from the turbulence of previous years. Inflation, which was a major global challenge in 2022 and 2023, has finally been brought under control, with expectations of a decline to 4.2% in 2025 and further to 3.5% in 2026.

Central banks worldwide have begun gradually easing monetary policies in response to stabilising inflation. However, the pace and extent of interest rate reductions vary across economies. In the United States, the Federal Reserve has initiated a cycle of rate cuts, though it is anticipated to be shorter than initially expected. Projections suggest that the Fed’s rate could settle between 3.0% and 3.75% in the second half of 2025, which is higher than previously forecasted.

For developing economies—responsible for 60% of global growth—the outlook remains mixed. The World Bank predicts that these economies will conclude the first quarter of the 21st century with their weakest long-term growth prospects since 2000. Growth in developing countries is expected to remain stable at around 4% over the next two years, which is weaker than pre-pandemic levels and insufficient for any meaningful reduction in poverty.

// The trend of “nearsourcing” and regionalisation of value chains continued to strengthen in 2024 as a response to escalating geopolitical tensions and an increasing need for greater resilience and resource security. This has led to significant shifts in global trade flows, with heightened emphasis on regional partnerships and diversification of supply sources. Simultaneously, digitalisation and automation are transforming all aspects of the economy, creating new opportunities but also presenting challenges for the workforce and traditional industries. In the financial sector, traditional institutions face intensified competition from fintech companies alongside the need for rapid adaptation to shifting consumer preferences. In response, the sector is heavily investing in digitalisation and personalised financial services, with collaboration with fintech firms emerging as a dominant trend and one of the key success factors.

Sustainable development and ESG (Environmental, Social, and Governance) principles continue to be a focal point of global economic strategies. The NextGenerationEU fund, together with the European Union’s long-term budget, plans investments exceeding €2 trillion by 2027, directing resources toward priority areas such as renewable energy, digitalisation, and environmental protection. In the realm of sustainable investing, the issuance of green, social, sustainable, and sustainability-linked bonds (GSS+) is expected to surpass $1 trillion by 2025, driven by favourable interest rates and growing investor demand for sustainable assets. Additionally, the launch of the EU Green Bond

Market is anticipated, featuring a new voluntary standard that mandates enhanced reporting and verification. Similar programmes are being implemented in other parts of the world, reflecting a global consensus on the necessity of sustainable and inclusive economic growth. Against this backdrop, labour markets exhibit divergent trends across regions. While some markets continue to experience labour shortages—fueling inflationary pressures through wage growth—others face challenges related to unemployment. This imbalance further deepens the global income gap and underscores the need for targeted employment policies and retraining initiatives.

// Although the global economy is showing signs of stabilisation and moderate optimism, risks and uncertainties persist. In this context, the key challenge remains achieving sustainable and inclusive economic growth. This challenge is becoming increasingly complex in a world grappling with numerous global shifts, from climate change to technological revolutions. The current response to these challenges underscores inclusive employment, social objectives, and the green transition as drivers of sustainable development. Inclusive employment facilitates the integration of all segments of society into the workforce, with particular emphasis on vulnerable groups such as youth, women, and individuals with disabilities. Social objectives, on the other hand, focus on improving education, healthcare, and social protection while strengthening social cohesion. The green transition, as the third pillar, involves transitioning to sustainable models of production and consumption. In this way, traditionally social categories are transformed into economic factors by creating new market niches and fostering innovation. Active programmes, such as support for training in green jobs and promoting innovative solutions for sustainable development, already demonstrate how these goals can be practically implemented. At the same time, the implementation of AI technologies and other innovations plays a significant role in addressing identified challenges, requiring the development of new skills and adaptation of business models. According to IDC research, business spending on AI adoption and utilisation will have a cumulative global economic impact of $19.9 trillion by 2030, driving 3.5% of global GDP in that year – placing AI prominently among key drivers of economic growth.

// For domestic small and medium-sized enterprises (SMEs) and farmers, adapting to new technologies, adopting sustainable business practices, and integrating into regional value chains are becoming critical factors for competitiveness alongside increased flexibility and diversification. Consequently, adaptability to rapid technological changes and resilience to external shocks are expected to be key success factors. Simultaneously, diminishing returns from an economy reliant on foreign direct investment (FDI), subsidies, and labour- intensive activities highlight the need for a shift in approach. While seemingly high levels of FDI in 2024 yielded limited net results – an issue that will be analysed in greater detail in subsequent macroeconomic framework reviews – it suggests that growth models based on externally subsidised investments are proving less effective, particularly in the long term. Future economic development is therefore expected to focus on more sustainable growth by supporting local SMEs that generate lasting value within the country. This not only strengthens the domestic economy but also enhances resilience to global shocks. Entrepreneurs must be prepared to seize emerging opportunities in areas such as the green economy, digitalisation, regional integration, and substitution of distant suppliers. In this context, support programmes organised by state institutions or international development organisations can enable businesses to capitalise on these opportunities. Based on insights from numerous programmes and initiatives, there is a wide range of support schemes available where most entrepreneurs can find solutions tailored to their needs. By leveraging these resources effectively, entrepreneurs and farmers can strengthen their internal capacities to meet forthcoming opportunities head-on. For all available opportunities, we will continue our analysis on these pages – just as we have done through the previous 141 editions.

SDA: Support for Adopting Business Principles in International Value Chains

// The Serbian Development Agency (SDA) launched a new call for support programme for companies to adopt business principles in international value chains for 2024, as the third programme in the current cycle of support for internalisation of operations. This programme represents an additional step towards enhancing the integration of domestic business entities into global economic flows, with a particular focus on establishing commercial relations with multinational companies (MNCs). The programme’s budget amounts to 45 million dinars, with a maximum grant of up to 7 million dinars per beneficiary. This significant financial injection enables domestic enterprises to improve their business processes and competitiveness in the international market, as it allows for the covering of eligible costs for at least two project activities, one of which must necessarily include an evaluation of business performance prior to listing on reference interactive platforms.

Eligibility is granted to micro, small, and medium-sized enterprises and entrepreneurs with a minimum of 5 employees and a revenue from product sales of at least 20 million dinars in 2023. This ensures that the programme targets established firms with growth and internationalisation potential. Supported activities encompass a wide range of manufacturing sectors, including the production of electrical equipment, metal products, computers, electronic and optical products, machinery and equipment,

motor vehicles, rubber and plastic products, as well as specific types of printing. The programme offers comprehensive support for improving competitiveness and digitalisation. This includes quality system certification according to industrial standards, the introduction of software solutions for optimising production processes, website development, and search engine optimisation. Particularly significant is the support for listing on reference interactive platforms, opening doors to global supply chains.

Consultancy support covers a broad spectrum of areas such as optimisation of production and business processes, improvement of corporate governance, human resource management, introduction of ESG factors, and alignment with green industry requirements.

// The combined approach enables comprehensive business improvement, preparing companies for various challenges in the global market. Moreover, it allows companies to plan their activities by integrating programme support into their development strategies. Through support for adopting business principles in international value chains, the programme not only helps domestic enterprises integrate into global flows but also raises their overall competitiveness and sustainability both locally and internationally. This is particularly important in the context of the ongoing “nearsourcing” trend, where multinational companies increasingly seek reliable suppliers in regional proximity due to crises shaping the global market and necessitating the redefinition of business and development strategies. For many domestic enterprises, this programme could be a turning point in their development. Adopting international business standards, digitalising processes, and improving management practices can significantly enhance their attractiveness to potential MNC partners. Simultaneously, these improvements contribute to long-term sustainability and competitiveness in both domestic and international markets. For potential applicants, it is crucial to begin preparing documentation and planning project activities timely. A thorough understanding of the programme’s terms and conditions and a clear vision of how the support will contribute to the company’s long-term development can be decisive for successful application and project implementation. Preparing a high-quality application that clearly demonstrates growth potential and readiness to adopt new practices can be key to success, and expert level support during this process, whether through internal resources or external consultants, can significantly increase the chances of securing funding.

Provincial Secretariat: Grants for Machinery and Equipment

// The Provincial Secretariat for Economy and Tourism of AP Vojvodina has announced a new call for the allocation of grants to micro and small enterprises, as well as entrepreneurs operating in the Province. The total budget for this call amounts to 215 million dinars, with the aim of fostering further economic growth and enhancing business operations through investments in fixed or working assets. The focus is on improving technical and technological capabilities, reducing costs, increasing competitiveness and efficiency, as well as introducing new or expanding existing business capacities.

The grants are intended to subsidise the costs of acquiring fixed assets – machinery and equipment – including vehicles for commercial purpose. Additionally, the programme supports the procurement of equipment for improving energy efficiency and utilising renewable energy sources. A unique feature of this call is the possibility of reimbursing costs for the purchase of used fixed assets, provided that used machinery and equipment are no older than five years. In such cases, a valuation report

prepared by a certified court expert must be submitted. Used motor vehicles must not be older than three years. The grants are disbursed on a reimbursement basis for equipment purchased, delivered, and paid for between 31 January 2024 and the closing date of the call. The call is open to micro and small enterprises, as well as entrepreneurs, including those under a flat-rate tax regime. Approved funding can cover up to 80% of the invoiced value (excluding VAT), ranging from 350.000 to 1.000.000 dinars.

// Eligible applicants may submit only one application; however, that application can include up to ten pieces of machinery or equipment from a maximum of five different suppliers. Standard eligibility criteria include financial stability—applicants must not have incurred a net loss in the previous year—and compliance with all state obligations regarding taxes and contributions. Applicants must also adhere to restrictions related to previously received state aid and must not have any affiliations with equipment suppliers. Beyond these standard criteria, additional consideration is given to businesses employing individuals with disabilities and enterprises that have been operating for more than two years. Extra points are awarded to manufacturing activities and businesses located in less developed municipalities. The application process has been simplified, with minimal documentation requirements, making this call highly accessible to its target audience. Given the high co-financing percentage and emphasis on improving competitiveness and operational efficiency, this programme represents a significant opportunity for micro and small enterprises in Vojvodina to modernise their operations and strengthen their market position.

KEY ECONOMIC INDICATORSJan - 25
1Annual inflation4,30%
2Reference interest rate5,75%
3Unemployment rate8,10%
4Average net salary - RSD100.738
5Average pension - RSD50.683
6Exchange rate RSD/EUR
On the last day of the month117,0149
Average exchange rate for the month116,9730
7Exchange rate RSD/USD
On the last day of the month112,4386
Average exchange rate for the month111,6927

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