Corona virus did not hinder foreign investments in Serbia

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A record 3.9 billion euros arrived in 2021, and 6.9 billion euros of foreign direct investments in two pandemic years. The corona did not prevent foreign investors from continuing to invest in our country, and according to preliminary data from the National Bank of Serbia in 2021, 3.9 billion euros, which exceeded the previous record from 2019. At that time, foreign direct investments (FDI) were worth 3.815 billion euros.
Compared to 2020, the inflow of FDI is higher by 27.1 percent, while compared to the record 2019, it is higher by 1.2 percent.
Data from the bank’s headquarters show that most of the FDI went to tradable sectors, primarily the processing industry, which they consider crucial for the continuation of double-digit growth in Serbian exports in the coming years. As in previous years, during 2021, foreign investors invested in both new and existing projects.
The corona virus pandemic did not have a significant impact on the inflow of FDI into Serbia. During the two pandemic years (2020 and 2021), our country attracted 6.9 billion euros of FDI, which is primarily due to the fact that both before the pandemic and during the pandemic, macroeconomic, financial and fiscal stability was preserved, based on stability exchange rate. In addition, we estimate that the adoption of a package of monetary and fiscal measures to help citizens and the economy at the very beginning of the pandemic played a key role in achieving such a high inflow of foreign direct investment. The package that was adopted at that time was not only one of the largest in proportion to the size of the economy, but also one of the fastest adopted in Europe. Thanks to that, at the time of the greatest uncertainty at the very beginning of the pandemic (March, April and May 2020), a greater decline in business, consumer and investment confidence was prevented and the normal functioning of the economy and the continuation of the investment cycle of the state and private sector was ensured.
Asked whether the interrupted supply chains may have influenced the increase of investments in the central bank, they answered that they do not rule out the possibility that it positively contributed to the inflow of FDI to Serbia, but that their analyzes do not show that this effect was significant.
When it comes to FDI for a long time, the average annual inflow in the ten-year period starting in 2007 and ending in 2016 amounted to 2.1 billion euros, while in the previous five years, the average annual inflow of FDI increased by more than 50 percent. From 2017 until the preliminary data for 2021, the average annual inflow was over 3.3 billion euros (total FDI inflow over the last five years was 16.7 billion euros).
“It should be borne in mind that the structure of FDI is much more favorable, in the sense that, unlike in the previous period, and especially before 2012, much more investment is directed to tradable sectors. The period up to 2012 was marked by inflows from large privatizations, sales of mobile operators and licenses for mobile operators, privatization of the banking sector, trading houses, as well as the sale of one of the domestic retail chains to the Belgian company Delhaize in 2011, should be taken with a grain of salt, because it is only a matter of changing ownership without significant direct economic effects,“ say the NBS.
As a result of the strong inflow of FDI, as well as due to the increase of state investments in infrastructure, the number of formally employed in the private sector has increased by more than 24 percent since the end of 2014, ie by 329,000 people. At the end of 2014, 1,356,704 workers formally worked in the private sector in Serbia, while in November 2021, 1,685,283 were employed. In addition, employment growth was recorded in key sectors – manufacturing, construction, trade, ICT and other services of the predominantly private sector. The average salary in the private sector in the same period increased by more than 55 percent – from about 320 euros at the end of 2014, to 500 euros, according to the latest data for 2021, according to the NBS.
In the same period, exports of goods and services increased from 14.5 billion euros in 2014 to more than 28 billion euros, estimated at 2021, with much of that growth coming from increased exports of manufacturing and the most important segments of services such as information and communication, business and transport, as well as tourism services, Politika reports.