Serbian Davos: Serbia Needs a New Model of Economic Growth, Greater Productivity

Blagoje Paunovic (Photo: PrintScreen Yt/EKOF Belgrade)

At the March 3 business forum on Mt. Kopaonik dubbed The Serbian Davos, economists pointed out that, to achieve the high growth rate of its gross domestic product (GDP), Serbia requires a new growth model based on domestic investments as well as an increase in productivity.

Blagoje Paunovic, the president of Serbia’s Fiscal Council, stated that the country is approaching the point where the effect of direct foreign investments will amount to zero, which he believes may pose a big problem for achieving the planned high GDP growth.

“So far, Serbia’s economic growth has been based on large public investments and an increase in direct foreign investments, with domestic investments remaining low. Now, it is becoming difficult to finance large public projects. It seems we’ve reached the end of the line because certain projects are being put on hold,” Paunovic explained.

According to him, the drop in direct foreign investments contributing to Serbia’s BDP indicates the end of the investment cycle, meaning that foreign investors are taking most of their profits out of the country and committing them elsewhere.

“We should redirect ourselves toward the entrepreneurial growth model and investments and initiatives from domestic businesses,” Paunovic concluded.