The influx of foreign direct investment (FDI) from January to the end of September amounted to 3.2 billion euros, an eight percent increase compared to the same period last year, according to data from the National Bank of Serbia.
Serbian President Aleksandar Vučić recently announced that FDI reached 4.2 billion euros for the first 11 months and is expected to surpass last year’s 4.4 billion euros by the year-end.
When subtracting foreign investments entering the country from Serbian residents’ investments abroad, net FDI for the first nine months amounted to slightly less than three billion euros.
However, the capital that foreigners invest in Serbia is for the purpose of making a profit. The total outflow of primary income due to FDI amounted to 2.43 billion euros.
Out of this, foreign owners of companies in Serbia withdrew 1.43 billion euros in dividends, while 120.3 million euros related to outflows due to interest. Another 883.6 million euros represent outflows due to reinvested profits, representing the retained earnings of foreign-owned companies.
“If we reduce the inflow of 3.2 billion euros, realized through FDI non-residents in Serbia, by the total outflow of primary income from FDI expenses of 2.4 billion euros (or funds ‘returned’ to foreign investors), the net inflow due to FDI non-residents in Serbia amounted to 797.1 million euros,” according to the December analysis by MAT.
This net inflow for the first nine months of this year was 30 percent or 344 million euros lower than the same period in 2022.
Regarding portfolio investments, primarily government securities, 255 million euros left the country for the first nine months, and the net outflow due to interest on other investments reached 445.3 million euros, almost 90 percent more than the same period last year.
Other investments, including deposits, financial, and trade credits, resulted in a net inflow of almost 800 million euros in this period.
In terms of portfolio investments, mostly government debt, they increased by about 1.1 billion euros from the beginning of the year until the end of September. This is 923.4 million euros or 542 percent more than the same period last year, mainly due to the state’s issuance of euro bonds for 1.6 billion euros in January.
Although capital owners have decided to withdraw profits earned in Serbia more massively, the structure of foreign direct investment has improved this year.
The share of reinvested profits, or profits that existing investors decide to invest in expanding production, increased from last year’s 57.5 percent to 81 percent in total FDI.
