LONDON–(BUSINESS WIRE)–Technavio analysts forecast the leather and allied products market in Serbia to grow at a CAGR of more than 2% during the forecast period, according to their latest report.

The research study covers the present scenario and growth prospects of leather and allied products market in Serbia for 2016-2020. The report provides data on the different segments of the market, which are based on the type of product, including tanned and dressed leather, and dressed and dyed fur and luggage, handbags, saddlery, and harnesses.

According to Chandrakumar Badala Jaganathan, a lead analyst at Technavio for bio-chemicals and bio-materials “The GDP in Serbia is expected to accelerate in 2016 following a number of government initiatives including relaxation in monetary policies, structural reforms such as strengthening of the banking system, improvements in land management, and changes in the tax structure. These factors, along with improvements in domestic and political conditions as a result of reforms in the judicial, healthcare, and administrative sectors is expected to lead to an increase in foreign investments. Moreover, the country is currently in negotiations for accession to the EU, and this is expected to further improve investor confidence.”

Technavio chemicals and materials analysts highlight the following three factors that are contributing to the growth of the leather and allied product market in Serbia:

• Strategic location
• Focus on branding and marketing by manufacturers
• Favorable tax structure

Strategic location

Serbia is located in the Balkan Peninsula, bordering Croatia and Bosnia-Herzegovina to the west, Hungary to the north, Bulgaria to the east, Montenegro to the southwest, and Albania and Macedonia to the south. This puts the country at the crossroads of Europe and Asia. It is located on the shortest trade route between Western Europe, central Europe, MEA, and Asia. This strategic positioning provides a significant advantage from the point of view of trade. Historically, this has been one of the key factors in influencing the inflow of FDI into the country’s manufacturing sectors, and the leather manufacturing industry in the country has been one of the top beneficiaries of this inflow.

Focus on branding and marketing by manufacturers

Manufacturers of leather and allied products in Serbia are focusing on branding their products to differentiate themselves from their competitors. “Many medium and large-scale manufacturers also play an active role in marketing their own brands to enhance visibility in the fragmented market. For instance, The Manual Co is one such manufacturer of leather products that focuses on branding and marketing its products,” says Chandrakumar.

Favorable tax structure

Serbia is one of the most competitive industry destinations in Europe in terms of taxation. Legal entities attract a corporate tax of 15%, which is one of the lowest in Europe. The standard rate for VAT is 20% and the reduced rate is 10%, which is among the most competitive in Central and Eastern Europe. The government also provides additional incentives for employing new workers and investing in undeveloped regions. Such initiatives have strengthened the confidence of foreign investors in the market.

Moreover, companies registered as small enterprises are entitled to a tax credit for fixed assets of up to 40% of the investment. As a majority of the players in the leather and allied products market in Serbia are micro, small, and medium-sized enterprises, such initiatives have been beneficial in maintaining sustained growth.

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