Economists: Serbia’s political instability will first affect potential investors
Possible political instability in Serbia due to the possible unfavourable course of negotiations between Belgrade and Pristina would first affect investors’ decisions to exclude Serbia from business expansion plans, according to economy experts.
Economist Goran Pitic has told the Beta news agency that „healthy“, non-speculative capital prefers political stability.
„Experience shows that escalations of conflicts, especially political conflicts, lead to the escape of capital that requires more stable investment spaces,“ said Pitic, who is president of the Fefa Faculty Council in Belgrade.
He added that Serbia, as one of the most important regional areas, stirred the interest of foreign investors, but as a small open economy, it was very sensitive to the interruption of the continuity of the inflow of foreign direct investments.
As he explained, this, on the one hand, speaks about the quality of the development model, which should certainly promote the domestic private sector more and ensure the possibility of strengthening it, which would be the backbone of economic development in the long run.
According to him, it is very important to understand the importance of foreign direct investment in Serbia, which lies in affecting employment, gross domestic product (GDP), and currently they are especially important due to the stability of the exchange rate.
Withdrawal of investments would affect everyone
„The withdrawal or reduction of foreign direct investments would affect the inflow of foreign currencies, which would increase the pressure on a relatively stable exchange rate and the melting of foreign exchange reserves in order to defend it, and on the other hand, the sliding of the exchange rate would affect salaries and the standard,“ Pitic said.
He stated that the withdrawal of investments would also affect public debt because it would increase dramatically, and thus „investment stability“ would be lost.
He pointed out that the current situation did not show that Serbia was facing a greater „challenge“. „Investors are interested, those who are in Serbia, according to the data in their chambers of commerce, they are ‘somewhat satisfied’ and, with all the problems that the economy has, there is no challenge for their survival at the moment,“ Pitic said.
The problem, as he said, is the inflow of new investments if there are greater political challenges, because there is a large number of companies that would listen to what their governments and European institutions are saying.
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