In its latest issue, the Financial Times (FT) wrote about Serbia’s successful economic and fiscal reforms in three articles and an interview with Finance Minister Sinisa Mali, underlining that the country’s GDP has been rising since 2014.
“After a sharp drop in 2012, FDI into Serbia has flowed back, with improvements in employment and public debt accompanying rise in GDP. This new stability has drawn investment from the EU, the US and China. Serbia has witnessed almost non-stop FDI growth for seven years, bouncing back after inflows plummeted in 2012, according to World Bank data. The influx has been particularly strong since 2015, going from €2bn to €3.5m in 2018, or 6% of GDP to 8.2%, respectively, the National Bank of Serbia (NBS) reports,” the FT writes and continues:
“Similarly, greenfield foreign investment to Serbia has grown steadily since 2014, when inflows dropped, to hit unprecedented highs in 2018 following the arrival of 105 individual projects, according to greenfield investment monitor fDi Markets. The landlocked country of 7 million inhabitants, and a candidate for EU membership, was recently ranked the world’s number one recipient of greenfield foreign investment when taking into account GDP levels, according to a 2019 list from fDi Intelligence.
With economic revival and reforms underway, foreign investors are stepping up their interest in Serbia. Increased foreign investment is expected for 2019, jumping to €3.8bn from €3.5bn the year before, according to the NBS. The majority of this, about 70%, still comes from EU countries, especially Germany, Italy, the Netherlands and Austria, who have invested heavily in Serbian manufacturing, especially automotive components.
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American FDI is another prominent player, while Chinese investment has grown significantly in recent years, representing 20% of Serbia’s total FDI capital inflows in 2018, a record high, according to the NBS.
The country received the highest amount of Chinese foreign investment out of the ‘17+1’ group in 2019 (the 17 countries from central and eastern Europe with whom Beijing has sought greater economic partnership), according to fDi Markets.
Chinese FDI has been directed mainly towards Serbia’s export-oriented manufacturing areas, such as steel and copper production, as well as key infrastructural projects, all of which are areas of Chinese expertise, says NBS.”
The country has been given a BB + credit rating with a positive outlook, according to the rating agency Standard & Poor’s, and has made significant progress on the World Bank’s Doing Business List, jumping from 93rd position in 2013 to 44th position in 2019, among 190 countries.
Among other things, special emphasis is placed on the development of IT services, software and hardware sectors in Serbia, stressing that this is the fastest-growing economic segment in the country, which exports have grown strongly since 2015, exceeding one billion euros in the last two years.
Although Serbia is a small IT stakeholder on a global and even European level, the Financial Times writes that this sector now represents 10% of the country’s GDP.
About 2,000 IT companies operate in Serbia, employing close to 20,000 people, according to data from the Serbian Chamber of Commerce. Serbia experienced an unprecedented level of foreign investments in the IT sector in 2019 with the US companies, including IBM, Schneider Electric, SKF, Adobe, Oracle, Google, HP, being the most active.
(B92, the Financial Times, 13.02.2020)
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