Serbian machinery exports have found a niche selling their low-priced goods to their poorer neighbors despite sanctions. Even after adding the cost of sanctions-bending bribes, Serbian machines are still price-competitive.
Weaknesses
Virtual economic collapse following imposition of sanctions; effect on fuel-supply particularly hard-hitting. Severe disruption of food-distribution networks, leading to shortages, a barter economy and widespread hunger.
Profile
Following the transition to a multiparty system, a short-lived reformist government began to implement privatization, fiscal reform and a reorganization of the banking sector. The war in Bosnia has since devastated these initiatives. Sanctions, which have cut off imports and exports, have decimated the emerging private sector as well as the state sector. The hyperinflation of 1992-1993 û inflation reached an hourly rate of 0.7% in December 1993 û pushed the economy to the verge of complete collapse. Savings were rendered worthless and any incentive to invest in the economy was destroyed. Output levels in 1993 fell to a third of 1990 levels and Deutsch Marks assumed the position of almost legal tender. The 1994 stabilization plan is based on the creation of a "super dinar" pegged to the Deutsch Mark. However, it will be difficult to implement without IMF backing or a cut in spending.
