With the markets and also the economy seeing continued effects in the COVID-19 pandemic, many investors are turning their attention toward 2023. Which trends and concerns could shape an investment landscape in 2023?
Despite continued uncertainties related to COVID-19, global FDI flows in 2023 recovered to pre-pandemic levels. The global outlook for 2023 is mainly positive, but you will find substantial downside risks associated with the vagaries from the pandemic; a frightening policy environment considering a restricted fiscal space when compared to pre-pandemic period and persistent inflationary pressures; and rising costs of critical inputs like raw materials, energy and transport. The pandemic also exposed the fragility of global supply chains, with suppliers scattered across multiple countries and continents. In this context, and given prevailing nearshoring trends, the post-COVID environment can create opportunities for Serbian companies to further link with and benefit from global and regional value chains. Serbia has already established itself as the leading investment destination in the region. However, to help build on this positive trend, Serbia needs to improve its business environment, strengthen the rule of law, ensure stability in providing critical inputs for example electricity and gas, strengthen the ability of the work force and the quality and productivity of domestic firms.
How can you rate the general impact from the crisis on the Serbian economy and which direction should we decide to try overcome consequences and follow the growth?
It is estimated that Serbia's GDP contracted by an annual 0.9 % in real terms in 2023, because of the impact from the COVID-19 pandemic and related lockdowns. However, the deployment of a timely and sizeable fiscal stimulus package – akin to 11.6 percent of GDP – limited the depth of the recession. In early 2023, the Serbian authorities implemented another stimulus package, amounting to 4.2 percent of GDP. As a result of domestic economic policy, as well as on the back of global economic recovery, the Serbian economy grew at around 7 percent in tangible terms in 2023. Anticipating, Serbia needs to pursue a more ambitious group of structural reforms to get rid of remaining bottlenecks that hamper faster economic growth. A few of the priority areas range from the energy sector; transport and trade facilitation; education, across all levels; and delivery of services by local governments and utility companies
