It is encouraging that half of the domestic companies are planning to continue investing in equipment and basic resources and that large foreign companies that are already present on the market, primarily German ones, are announcing the continuation of their operations and investments in Serbia. However, a need for caution is suggested by the possibility of a return of the epidemic and associated geopolitical risks.
It is quite certain that the speed of recovery of the Serbian economy will depend, among other things, on how quickly the global and EU economy will recover, with the EU representing the main foreign trade partner and largest investor in Serbia and the region, with which we realise two-thirds of our total international exports, imports and trade. This applies in particular to the speed at which we will see the revitalising of the economies of countries like Germany or Italy, with which we’ve had the greatest trade and which are the home countries of the most foreign investments and companies that do business here.
The Serbian economy has shown, during the pandemic, a surprising and encouraging dose of vitality, flexibility and an ability to adapt even in the most difficult circumstances, continuing to produce, export and fulfil contractual obligations to partners around the world, while the state confirmed its exceptional skills in crisis management and understanding for the needs of business leaders.
This has contributed to saving jobs and companies, maintaining liquidity and securing a realistic basis for a faster recovery, and – according to independent international financial institutions – a smaller fall in GDP this year, stronger than average growth in the next year and a better outlook than most comparable economies in the medium and long term. This also means greater opportunities and greater attractiveness for the international business community, which in the coming period will, more than ever, seek secure and stimulating investment destinations that guarantee better conditions for doing business, greater predictability and profit, as well as healthier local economies and suppliers that they can rely on.
Despite the fact that the openness of the Serbian economy and its great connectivity with the international market and supply chains seem like a handicap at this moment seem, due to a great dependence on the movements of external markets, serving optimism are a series of favourable facts. From preserved macroeconomic stability, via the greater readiness of the Serbian economy in a structural sense than during the global financial crisis of 2008, to forecasts of high growth in 2021 of between five and eight per cent – more than enough to cover the losses of the economy this year – and good prospects for the further improvement of the country’s credit rating and its transition to the investment-grade zone.
Global uncertainties additionally point to the need to strengthen regional cooperation and accelerate construction of a common regional market in order to ease and increase mutual and world trade
The fact that agency Standard & Poor’s confirmed Serbia’s previous BB+ credit rating even under the conditions of the global crisis is exceptionally important to the domestic economy and provides an excellent signal to investors and partners from around the world. With expectations among more than half of domestic companies – surveyed in the regular quarterly survey of the Chamber of Commerce & Industry of Serbia – that they will not halt their investments in equipment and fixed assets, we are particularly encouraged by the confirmations of large foreign companies already present in the country, primarily German ones, that they will continue operations and investments in Serbia, are continuing to talk with potential new investors and are announcing some major investments.
Of course, despite the fact that this global crisis – although it has great consequences for the world economy – is not in its nature deep or a crisis of liquidity like the one from 2008 (which is indicated, among other things, by the preserved liquidity of large systems and banks and the relatively favourable stock market price of copper in relation to the steep drop in the price of oil), caution is not a waste. First and foremost, due to the unpredictability of further events – the speed of opening the economies of the most developed countries, the possibility of a “second wave” of the pandemic and geopolitical risks.
Global uncertainties add to the significance and, like never before, point to the need to strengthen regional cooperation, accelerate the construction of a common regional market in order to ease and increase mutual and world trade, enhance the attractiveness of the region for domestic and foreign investment, as well as the need to continue reforms that will enable the faster and deeper integration of the region into the unified legal and economic system of the European Union.
