“The closure of factories that were brought in through various subsidies which we ourselves paid for with real money from the state budget – I said several years ago that there would come a withdrawal of foreign investments and a reduction in our country’s export potential, and official statistics are now showing exactly that. Our trade deficit is not shrinking, our balance of payments deficit is not shrinking, and foreign direct investments have been significantly lower than planned. Our GDP has also slowed down – instead of four per cent growth, we now have two per cent. All of this is an expected consequence of a completely illogical and unprofessional management of macroeconomic policy in our country,” said Dejan Šoškić, professor at the Faculty of Economics in Belgrade, speaking about the closure of certain production plants in Serbia in recent months.
Speaking on the N1 Direktno programme, Šoškić stated that if we have opted for a fixed exchange rate while simultaneously increasing wages without increasing productivity, labour costs will rise and Serbian production will become less competitive – in other words, more expensive compared with foreign production – thereby undermining our export potential.
He described the country’s development model based on the sale of cheap labour as fundamentally flawed.
“I believe this is a completely wrong development model for the country. We should not base our economy on selling cheap labour. With cheap labour, we cannot have good wages, and without good wages, there can be no prosperous population. Therefore, the concept is flawed from the outset, and now it has quite literally hit a wall because even foreign direct investments that relied on our cheap labour can no longer remain profitable, since that labour is no longer so cheap,” he said.
Speaking about the current economic situation in Serbia, the Belgrade Faculty of Economics professor assessed that the country is in a “more than worrying phase”.
“The key sectors of the national economy – agriculture and energy – are neither protected nor being developed adequately,” he said.
Šoškić recalled the crises the country had experienced in the energy sector in recent years due to poor management.
“On the other hand, in agriculture we have reached the point where all sorts of products are being imported, while our own farmers are pouring away their produce,” he added.
On the situation with NIS
He also stated that Serbia must ensure that products made in the country are sufficiently competitive. Commenting on the situation surrounding the purchase of NIS, Šoškić said that “many unclear messages are coming from different sides”.
“The whole process is in some way completely non-transparent, with statements that say one thing today and another tomorrow. Looking at it from a distance, it seems to me like an unserious activity on the part of the state. I believe we should have taken a clear position back in 2014, given that we have an important company that could potentially become the subject of sanctions. Sanctions against Russia were first introduced then, and from 2022 onwards, intensive work should absolutely have been undertaken on this issue. I believe we had strong arguments to negotiate with our foreign partner in order to find a solution that would allow NIS to continue operating normally and be removed from the risk of sanctions and any form of endangerment,” Šoškić underlined.
(N1, 14.05.2026)