Vienna Institute: Serbia Recording 1.5% Growth Rate in 2023

Branimir Jovanovic (YouTube print screen)

Serbia’s growth rate in 2023 is 1.5 percent, the lowest in the Western Balkans, as opposed to 2020 and 2021, when Serbia was the regional leader in terms of growth, an expert of the Vienna Institute for International Economic Studies, Branimir Jovanovic, said to BETA on May 3.

The Western Balkan specialist said in an interview with the agency that there were two reasons for the sluggish growth rate, the first being that “Serbia didn’t handle the crisis caused by the war in Ukraine very well.” “It was clear that the war will hit Serbia harder than the rest of the region, because of closer  economic and political ties with Russia, but Serbia could have tried to be a sort of mediator between Russia and Ukraine, like Turkey did, which would have improved its international reputation,” Jovanovic said.

Instead, Serbia chose to be a passive observer, and the ambivalent position is not something Western investors would like. As they have been the exponents of growth for years, Serbia lost 18 percent of  foreign investments from the European Union in 2022,  the Vienna Institute’s expert explained.

The other reason, explains Jovanovic is that Serbia opted for an economic model providing that economic growth is based on foreign investments, the main driving force behind growth, which cannot result in long-term sustainable development. According to the expert, foreign investment is desirable, but not sufficient, because long-term sustainable development requires domestic private investments, nearly non-existent in Serbia.