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Priorities for Serbia’s economic growth

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Professor Milojko Arsić from the Faculty of Economics in Belgrade emphasized today that the primary objective of Serbia’s new government should be to foster conditions conducive to sustainable economic growth, further reduce unemployment, maintain macroeconomic stability, keep inflation low, lower interest rates, and prevent the onset of a debt crisis.

Arsić highlighted that economic growth over the past 11 years has been modest, with real economic growth totaling around 32 to 33 percent during that period. He emphasized the importance of considering real growth rather than nominal growth, especially given the increase in prices over time. In the last two years alone, GDP in euros has cumulatively increased by 30 percent, while real growth has been just over five percent.

The professor underscored the necessity of creating a more favorable environment for domestic entrepreneurs to spur economic growth, as foreign direct investments are expected to decline due to escalating business costs in Serbia. Factors such as rising energy prices and increased allocations for environmental initiatives have contributed to the higher cost of doing business in the country.

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Arsić stressed the importance of removing administrative barriers for domestic businesses and ensuring equality among domestic entrepreneurs without discrimination.

Regarding the country’s debt, Arsić estimated that Serbia will likely borrow around 15 billion euros. He noted that investments related to hosting the EXPO 2027 in Belgrade, totaling 17.8 billion euros, are just one part of the upcoming investment plans. Additional investments at the local level could bring the total to 23 to 24 billion euros, representing approximately seven percent of future GDP.

Arsić cautioned that maintaining a fixed exchange rate is crucial, as any disruption in the foreign exchange market could jeopardize the sustainability of Serbia’s public debt. He suggested increasing the share of taxes in financing investments to mitigate risks associated with debt accumulation.

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