When will FDIs return to the pre-pandemic level?

The pandemic has postponed many business projects for better days. Last year, foreign investments (FDI) worldwide dropped by up to 40%.

In 2020, Serbia received EUR 2.9 billion in net foreign direct investments, half of what it received in 2019. However, the Development Agency of Serbia is convinced that it would be possible to return to the pre-pandemic level of FDI while some experts believe that this might take between three to four years.

According to last year’s balance of payments data, the net FDI influx, amounting to EUR 2.9 billion, was more than enough to cover the current account deficit. In fact, the FDI sum was 46% higher than the deficit.

“Despite the pandemic, the FDI influx has remained strong in Serbia,” the National Bank of Serbia says and adds: “2019 was a record year for foreign investments when a total of EUR 3.8 billion-worth of FDI was made in Serbia. The steady growth of foreign investors’ interest in investing in export-oriented companies in Serbia, even during the pandemic, is mainly the result of the full macroeconomic, financial and fiscal stability achieved and preserved. Most of the foreign direct investments in Serbia in 2020 came from the Netherlands  (705.5 million euro), Slovenia (483.3 million euro) and China (478.9 million euro). Slovenia’s FDI influx in Serbia is mostly based on the sale of Komercijalna Banka to NLB Group.”

“2.9 billion euro worth of foreign direct investments arrived in Serbia last year, 19% less than in the previous year,” explains Milojko Arsić, professor at the Faculty of Economics. “The FDI would have been less if it weren’t for the sale of Komercijalna Banka. Investments will probably take three to four years to return to the previous pre-pandemic level. Serbia’s advantage is that China has become less attractive for FDI and production relocation due to higher wages and geopolitical relations. Perhaps we could attract some investments that would usually end up in China.”

According to the records of the Development Agency of Serbia, based on the number of implemented investment projects, the majority of investments came from Germany (14.9%), Italy (14.6%), Austria (8.2%), Slovenia (6.2%), the USA (5.4%), France (5%) and Turkey (3.4%). In terms of investment value, Italy is in the first place (10.7%), followed by the USA (10.3%), France (9.7%), Germany (9.7%), Austria (9.3%), China (8.9%) and the Czech Republic with 6.8%.

(Kamatica, 04.05.2021)





This post is also available in: Italiano

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