ECONOMY

Djindjic’s assassination unsettles prospects of Serbian economy

BELGRADE (Reuters) – The assassination of Prime Minister Zoran Djindjic is likely to slow investment and economic growth in Serbia, analysts and a minister said, but foreign investors made clear they would not pull out. Analysts said the murder of Djindjic in central Belgrade on Wednesday was likely to unnerve investors, reduce interest in upcoming sell-offs and make state firms cheaper, hurting growth. The government had based its 5.0 percent economic growth forecast for 2003 partly on $1 billion in foreign investment and privatization receipts, which may now be in doubt as investors reassess risk and stability in Serbia. Foreign Minister Goran Svilanovic told radio B92 that the growth forecast would have to be cut to around 2.0 percent, «due to the situation after the assassination.» Vladimir Gligorov, a researcher at the Vienna Institute for International Economic Studies (WIIW), said it may be hard for Serbia to find a substitute if foreign investments fall short. He said the economy underperformed in January and February. «Even 2 percent growth could be an optimistic scenario.» An analyst, who asked not to be named, said Serbia’s privatizations could slow down a lot. «For some time, Serbia will be perceived as a risky place for investors. It’s a small market and they need not rush. I believe the price of companies offered for sale could also suffer.» Gligorov said instability could also mean less remittances from expatriate Serbs, money that finances part of the trade gap. Finance Minister Bozidar Djelic said the European Bank for Reconstruction and Development and the European Investment Bank would be in Belgrade next week to discuss future projects in Serbia. «I am optimistic that the EU, the United States and Russia will go the extra mile for Serbia at this point in time. We need it and I am pretty sure they will respond,» he told a news briefing.