The German aviation giant MTU, which widely announced its arrival in Nova Pazova, announced that it would postpone the arrival of investments in Serbia for six months due to the crisis.
Also, the Chinese company HBIS, the owner of the ironworks in Smederevo, announced that it had stopped production in one of the two blast furnaces and announced the return to operation “when the market conditions for restarting are created.”
These are the first moves of foreign investors in Serbia who are postponing investments and plans due to the current situation with the coronavirus, states Blic.
Economic experts claim that it will by no means be the last, because such a policy of private companies is expected in circumstances when income and demand are falling on a global level. The consequences, as they claim, are less investments and new jobs, but also less funds in the budget and space for the economic progress of the country.
Blic reminds that “as far back as September last year, Serbia was at the top in terms of the inflow of foreign direct investments.”
According to the “World Investment Report 2019” of the UN Conference on Trade and Development (UNCTAD), Serbia had the largest inflow of foreign direct investments in the region – 4.1 billion dollars, with a growth of 44 percent in 2018.
“Today, you do not have any economic branch that has not been affected by the pandemic and no businessman whose income has not fallen in the past months. Therefore, we should not expect that they will now enter new investments, so it is unrealistic to estimate that we will continue to grow in that segment. That stalemate will have a very bad effect on the entire Serbian economy,” said Milan Kovacevic, a consultant for foreign investments.
In a conversation with Blic, he said that the investment was never completed until the factory started working and that there will certainly be a company that will stop some started projects. As he stated, that is happening not only in Serbia, but in the whole world.
“Foreign direct investments are a major item in our budget, and this year they will not be in the expected volume. At the same time, we spent two billion to help the economy, which we did not plan, we borrowed under unfavorable conditions abroad, we distributed 100 euros to all adult citizens,” Kovacevic reminded.
The world will have to get used to a lower standard of living
He added that the coronavirus did not bring only a pandemic of the disease, but also a “pandemic of the economy”, so the world will have to adjust to a lower quality of life, to a lower standard of living.
“Citizens will find it easier to master some new models of behavior, but they will find it harder to accept a lower standard, especially those parts of the population that have been the most sensitive so far. It will be difficult to survive, because it is not just a matter of preserving employment, but the market. For example, hairdressers or smaller caterers may not have fired workers, but they do not work and therefore there is no income, no money for salaries,” said Kovacevic.
Ljubodrag Savic, a professor at the Faculty of Economics in Belgrade, has a similar opinion for optimism, not only in Serbia, but globally.
“We are a vulnerable economy and I think we will have big problems with foreign investors, because those who already do business with us generally do not have their final product, but work for a well-known customer. These are all these manufacturers of cables, various components for cars… They depend on global partners, and as the automotive industry is currently in a big problem, there will not be much work for our factories either,” Savic said.
He assessed that there is a possibility that the rate of economic growth in Serbia will be in a bigger deficit than it was in 2014, when the decline was 7.6 percent, BizLife reports.
