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Serbian Textiles showing 3% CAGR
20
Jul '16
The textile manufacturing market in Serbia is expected to grow at a modest rate, posting a CAGR of 3% during 2015-2020, a recent study on the sector in the former Yugoslav state reported.

Backed by government policies and favourable trade agreements with the European Union (EU) apart from its strategic location at the crossroads of Europe and Asia, Serbia's textile sector is predicted to accelerate further with improvement in the business environment and inflow of FDI, noted the study by Technavio, a London-based research and advisory group.

Textile manufacturing, which is export oriented and labour intensive, is highly favoured by the government due to its huge employment generation potential. Serbian government therefore relaxed monetary policies and introduced structural reforms to provide a fillip to the sector.

Elaborating on the factors favouring the growth of textile sector, Technavio analyst Brijesh Kumar Choubey said Serbia's location in the Balkan peninsula at the crossroads of Europe and Asia provides it with a significant advantage from the perspective of trade.

This has been a key factor in influencing the inflow of FDI into the country's manufacturing sectors, including the textile manufacturing industry. Moreover, it puts the country in close proximity to leading fashion capitals, such as Italy and France, and enables the manufacturers to keep abreast of changing market trends and respond speedily, he said.

Favourable trade agreements with EU such as the Free Trade Agreement in 2005 and Stabilization and Association Agreement in 2008, have more than doubled the export of textiles to the 28-nation bloc, which is the country's most important trading partner. Exports account for nearly 70% of the revenue generated by the textile industry in Serbia.

Serbia has also signed trade agreements with Belarus, Turkey, the US, and members of Central European Free Trade Agreement (CEFTA), which also provides manufacturers with potential growth opportunities in foreign markets.

Although wages on a global scale are higher in Serbia than China, the East European country's strength lies in its highly skilled and qualified labour force that have contributed to the availability of subcontracting services at a low cost.

This proved to be a major driver of FDI in the country and in turn led to a rise in SMEs in the country over the past several years, the report noted. (SH)

Fibre2Fashion News Desk – India

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