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Balancing foreign investment with domestic growth: Serbia’s economic outlook

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Serbia’s ability to attract significant foreign direct investments, accounting for seven percent of GDP or four and a half billion euros last year, is vital for its small, open economy. However, according to Ivailo Izvorski, the World Bank‘s chief economist for the Europe and Central Asia region, this reliance on foreign investment alone is not sustainable. Domestic investment, including government investment in infrastructure, energy, roads, and railways, is also essential for economic growth and stability.

While global economic growth has slowed, particularly impacting the world’s poorest countries, Izvorski highlights the importance of maintaining stable growth rates for sustainable development, education, and job creation.

Geopolitical tensions pose another challenge, leading to geo-economic fragmentation and disruptions in global supply chains, which could affect various sectors, including the food industry.

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Regarding inflation, Serbia’s rate remains relatively high compared to other European countries, although it has been decreasing gradually. Izvorski attributes this partly to high energy prices globally. However, he notes that Serbia has made progress in reducing its deficit through fiscal and monetary policies, which have helped curb inflation. Continuing with these measures is crucial for further stabilizing prices in the country.

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