Despite record inflows of foreign direct investment (FDI) last year, one of the main topics in economic discussions has become the unsustainability of the growth model based on attracting FDI. The reason for this is not only the issues facing the European automotive industry, which has been a major driver of FDI in Serbia over the past 15 years, but also the fact that capital outflows from the country, in the form of profits earned by investors, are rapidly approaching the inflows.
The year 2024 was record-breaking in many aspects, both in terms of FDI inflows and capital outflows.
According to the specialized portal Makroekonomija.org, in 2024, Serbia surpassed the previous record for dollar-denominated FDI inflows set in 2011.
In 2024, the gross FDI inflow amounted to USD 5.8 billion. In the previous year, 2023, the FDI inflow was USD 4.93 billion, and the previous record was in 2011, at USD 4.934 billion.
A record was also set in the income from existing direct investments, which reached USD 4.95 billion, a 37.3% increase compared to 2023.
When the income from existing investments is subtracted from the new investment inflows, the difference is USD 809 million. This is the smallest difference since 2017 and is more than half a billion dollars lower than in 2023 (USD 1.32 billion).
Record reinvested profits
In 2024, income from existing investments accounted for 85.1% of the inflow from new investments. A higher ratio was only seen in 2012 (97%) and in 2017 (87.2%).
From 2008 to 2024, the total income from foreign investments amounted to USD 34.4 billion. Of that, USD 14.3 billion was reinvested, and USD 20.1 billion was repatriated, or paid to the owners through dividends.
In 2024, a record value of reinvested profits was achieved, amounting to USD 1.72 billion. The previous record was in 2018, with USD 1.36 billion reinvested.
Last year also saw a record high in repatriated profits. Foreign owners received USD 3.23 billion, surpassing the previous record set in 2023, when USD 2.345 billion was repatriated.
Record profitability rate
2024 also marked a record in the profitability rate on foreign direct investments, which reached 7.5%. This is the ratio of USD 4.95 billion in income to USD 66.2 billion in cumulative FDI inflows. If we look at the cumulative FDI inflows up to 2023, as the investments made in 2024 likely did not yet generate profit, the profitability rate increases to 8.2%.
Income from FDI accounted for 6% of Serbia’s GDP in 2024, also a record. The previous record was 5.7% in 2017.
