Serbia lags behind Central and Eastern Europe in development

In 2005, Serbia was 58% of the development of the countries of Central and Eastern Europe (CEE), and in 2022, this dropped to 56%, said the president of the Fiscal Council, Pavle Petrović, who is currently attending the Kopaonik Business Forum.

He also said that the economic growth of Serbia was far below its potential and that the CEE countries adopt new knowledge and technologies much faster than Serbia, which enables them to develop twice as quickly.

In those countries, according to him, the share of the most productive sectors, such as the manufacturing industry and IT services, is growing, whereas in Serbia, the fastest-growing companies in the 2020-2022 period came from traditional industries, commerce, construction, mining and similar industries, which comprise more than 75% of the economy.

Petrović went on to say that in Serbia, the IT sector is growing in a way that is similar to the CEE countries and added:”The share of the IT industry in the economy of all the CEE countries has increased four to five times in the past 20 years or so and Serbia is not an exception either. At the moment, the IT sector creates, on average between 3 and 4% of the total added value in those economies. The problem is that, in Serbia, the IT sector mostly works for export and foreign markets and not for the local economy.”

He added that Serbia had a high foreign direct investments (FDI) influx, but that FDIs were not made in so-called progressive sectors.

“For several years now, FDIs have comprised around 7% of the gross domestic product (GDP) in Serbia, of which a third, which is a solid share, goes to the manufacturing industry, which comprises 16% of Serbia’s economy. However, looking at investments within the manufacturing industry, only 30% end up in the progressive economic branches,” Petrović noted.

In the countries that make the Visegrad Group and Slovenia, as he said, over 50% of the FDIs are directed at progressive branches.

In SerbiaFDIs have contributed to the creation of new jobs, but mostly for the less qualified workforce, which is why the unemployment rate has dropped. However, FDIs haven’t led to an accelerated growth of productivity, as they have in the CEE countries.

Local private investments, as he said, are too low to change the growth model in Serbia. The total investments in Serbia have, as he said, grown strongly in the past years. In 2014, they were the lowest in CEE (15.9% of the GDP), but in 2022, they reached 24.2% of the GDP, which is slightly above the CEE average.

“Public investments in Serbia grew from 2.3% of the GDP in 2014 to 7.4% of the GDP in 2022. FDIs jumped from 3.5% of the GDP to 7.2% of the GDP, but they are not directed at progressive sectors. Local private investments have remained very low, far lower than in the CEE countries,” pointed out Petrović.

(eKapija, 05.03.2024)

This post is also available in: Italiano

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