Forecast: 50bln worth of FDI in Serbia by 2030

50-billion-euro worth of foreign direct investments (FDI) could be made in Serbia by 2030 – according to the experts from the Tanjug team who wrote an analysis titled “The model of macroeconomic projections for long-term debt sustainability and growth performance”.

According to the document, FDI accounted for 6.2 per cent of gross domestic product, and projections say they will drop to 6 per cent by 2027, while by 2030, they will make 5.8 per cent of Serbia’s GDP.

“The FDI share will decrease in the period after 2019 due to the possible outflow of profits,” the analysis says, adding that in the same period, the total amount of current account deficit would be around 26.6 billion euro, excluding possible donations.

The share of gross fixed investment in fixed assets will achieve the average annual growth of  8.5 per cent, and the value of these investments should amount to almost 27 billion euro in 2030.

The share of gross domestic savings in total investments will rise from an estimated 38 per cent this year to 47.3 per cent in 2023 and 61.3 per cent in 2030.

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The degree of the economy’s openness is measured by the ratio of external trade to GDP (share of exports and imports in GDP), which, according to the projection, will rise from 104.5 per cent in 2018 to128 per cent in 2030, which, according to the document, indicates a high degree of openness of the economy in the projection period.

The key assumption in the baseline scenario of this analysis is the “anchoring” of the deficit in trading in goods and services with foreign countries and the reduction in the share of the current account deficit in GDP, and therefore a more moderate rise in domestic demand and consumption.

The projection shows that, by 2021, the GDP growth rate could be 4.5 per cent, after which, in the years to come (from 2022 onward), this growth would amount to 5 per cent.

According to this growth dynamics, by the end of 2030, the value of Serbia’s GDP would reach about 91 billion euro.

It is reported that next year, Serbia’s GDP would slip down to 3.5 per cent, but in 2020, it would jump to 4 per cent, while the average GDP growth rate, in the period 2018-2030, would be 4.7 per cent.

When it comes to average growth rates for the next 12 years, the final consumption will be 3.9 per cent, and gross fixed investment in basic funds 8.5 per cent, the document says.

The share of government spending in GDP will fall from 17.4 per cent to 14 per cent in 2030.

The inflation, during the projected period, would be 3 per cent while by 2019, the dinar/euro exchange rate would appreciate, with the depreciation amounting to 2 per cent by the end of the period to which this analysis relates.

The risks that may affect the data stated in this forecast are related to the international environment and possibly the deepening of the global economic crisis, the migrant crisis, the reduction of the economic growth of the countries with which Serbia has significant external trade relations with, the withdrawal of investors, that is, capital outflow, deterioration of lending terms etc.

The internal risks could be further growth in consumption to the detriment of investments, the problem of (il)liquidity in the economy, the fall in the expected inflow of FDI, and political risks.

(Vecerenje Novosti, 25.10.2018)


This post is also available in: Italiano

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