ECONOMIC TIGER STUMBLES: Drastic Drop in Investment Inflows to Serbia, Authorities Blame Students!

The net inflow of foreign direct investments (FDI) into Serbia decreased by 67.5% in the first five months of this year, compared to the same period in 2024, according to the latest balance of payments report from the National Bank of Serbia.

Specifically, from 1,943 million euros in the first five months of 2024, the inflow dropped to 631 million euros in the same period of 2025. Data indicates that this decline was due to a significant reduction in gross inflows and a simultaneous doubling of investment outflows from the country.

REVERSAL IN APRIL AND MAY’S RETURN TO TREND

When this year’s data is broken down by month, it shows that for four months, we had a positive inflow of investments, while a larger outflow was recorded only in April.

FDI Comparison: January – May 2024 vs. 2025.

Stavka	Januar – Maj 2024.	Januar – Maj 2025.	Promena
Bruto priliv (Pasiva)	2.220 miliona €	1.193 miliona €	-46%
Odliv (Aktiva)	276 miliona €	562 miliona €	+104%
Neto priliv SDI	1.943 miliona €	631 milion €	-67,5%

Specifically, during the first three months of 2025, a stable net inflow of foreign direct investments was recorded. In January, the inflow was 197 million euros higher than the outflow, in February by 171 million, and in March, 204 million more foreign investments entered the country than “left.” However, April saw a sharp reversal, with a significant net outflow of investments, exceeding inflows by 171 million euros.

The situation improved again in May, when the largest monthly net inflow for the observed period was recorded, valued at 230 million euros.

The total result for the first five months, however, is significantly weaker compared to the previous year due to a combination of lower inflow and higher outflow, with April having a particularly negative impact.

GOVERNMENT BLAMES “BLOCKADERS” FOR INVESTMENT DECLINE

Minister of Finance Siniša Mali already in April, commenting on the International Monetary Fund’s decision to lower Serbia’s economic growth projection, took the opportunity to state that it was a “direct consequence of violence and blockades.”

“Slowed investment activity is also linked to investors’ perception of domestic developments over the past few months. We put a lot of effort into making Serbia a leader in the region in attracting investors, but the violence we are experiencing undermines the image of a safe country for capital placement. Investors do not want to invest in a country where normal life and work are blocked daily, where you have unregistered gatherings and violate people’s basic right to move freely,” Mali stated then in a press release.

ECONOMISTS’ STANCE ON THE DRASTIC FALL IN INVESTMENTS

Two leading domestic economic analyses, “Macroeconomic Analyses and Trends” (MAT) and “Quarterly Monitor” (QM), agree that the first months of 2025 saw a drastic drop in foreign direct investment (FDI) inflows into Serbia.

According to MAT data, the net inflow in the first four months amounted to only 385.4 million euros, which is an alarming 76.7% less than in the same period last year.

Analysts from “Quarterly Monitor,” based on first-quarter data, also pointed to an “unusually low” inflow, which was halved compared to the same period in 2024.

They cite a combination of factors as key reasons: the high base effect (as early 2024 was a record, partly due to a one-time sale of Telekom’s assets), domestic political uncertainty, reduced attractiveness of Serbia due to rising labor costs, and slowed economic growth in the Eurozone.

The MAT team further explains that this large decline was due to a double negative effect: investment inflows decreased by almost 50%, while at the same time, investment outflows from Serbia more than doubled (a growth of 141.6%).

Nevertheless, MAT also highlights one structurally positive trend. In the reduced FDI inflow, the share of equity investments increased (to 91.7%) compared to intercompany borrowing. This is considered more favorable because such investments do not increase the country’s gross debt.

Source: Nedeljnik, Photo: Pexels