Representatives from Serbia’s monetary and fiscal authorities agree that the country’s current economic growth model—relying on foreign investments and significant infrastructure projects—has proven successful. However, they warn that internal instability could hinder progress. The Fiscal Council, in particular, cautions that the positive impact of foreign direct investments (FDI) may soon diminish.
Blagoje Paunović, president of the Fiscal Council, highlighted the growing outflow of profits from foreign investments. “In 2024, the inflow of FDI reached 6.6 billion euros, but the outflow due to profit extraction was 4.3 billion euros, marking a 40% increase,” Paunović shared at the Kopaonik Business Forum. He emphasized that Serbia needs to shift towards a model that prioritizes domestic entrepreneurial growth, as opposed to continuing reliance on foreign capital. He also pointed out that future investments should focus on high-tech industries, rather than the traditional sectors that have dominated so far.
Turning to a growth rate of up to five percent, Dragijana Petrović, vice president of the Association of Economists of Serbia, discussed how to elevate Serbia to a high-income economy. “Achieving an average GDP per capita of 14,000 euros is a significant goal for Serbia,” she said. “This requires an increase in domestic investments.” Petrović noted that for Serbian businessmen to thrive, they need a better business environment, a more reliable legal framework, and greater support from the state, particularly in areas like export business and accessing new markets.
Petrović also highlighted the need for cooperation between the state and the private sector to foster a stable growth rate of four to five percent, with the Expo 2027 project likely pushing growth closer to five percent.
She stressed that it’s not enough for just one segment of the business community to grow. The state must support a broad network of small and medium-sized enterprises (SMEs), which she believes are the backbone of the economy. SMEs, she added, cannot expand and enter new markets without coordinated efforts, including supply chain integration and state assistance. Policies supporting SMEs and providing tax incentives should be prioritized to unlock the full potential of this vital sector.
