It is good that Serbia’s economic growth will remain positive during both this year and next, but considering the needs of the population and the economy, these kinds of growth rates remain signifficantly below the economic potential
The Serbian population feels continuous pressure as a result of inflation, rising energy prices and high interest rates, while businesspeople are increasingly concerned about the issue of selling products and services on the domestic market in the coming months, as well as in the next year. On the flip side, the Eurozone economy has entered a period of anaemic growth, especially Germany, which is this year recording a recession due to the reordering of its supply chains, both energy and industrial. The European economy’s low growth certainly also hampers the achieving of sales on the international market, considering that it represents the chief export market for products from Serbia and the source of most investments. Also standing out is the opinion of the majority of analysts that interest rates will remain high for longer than was initially expected, while inflation could emerge sporadically across certain parts of the world, representing a factor that we’ll have to live with over the medium term.
Recent events on the territory of Kosovo resounded strongly in the ears of investors, with lots of foreign companies asking how dificult the situation is, given the reports of their local press. However, the prevailing opinion is that any further escalation will be minimal. On the other hand, the complicating of the political situation in the Middle East is already causing a rise in uncertainty with regard to oil supplies, while the price of this basic energy source is also rising, given the preceding reduction in supplies as a result of production restrictions among OPEC countries.
Recent events on the territory of Kosovo resounded strongly in the ears of investors, but the prevailing opinion is that any further escalation will be minimal
The Chamber of Commerce And Industry of Serbia is continuing its internationalisation activities, with business trips to Iran and Kenya having been conducted, coupled with endeavours for domestic companies to occupy a certain segment of the rapidly growing markets of Asia and Africa. Distinct complexity exists when it comes to positioning on faraway markets, a concrete example of which is China, which represents one of the country’s main foreign trade partners, though to date the Chinese market has only accounted for less than half a per cent of Serbia’s total exports of food products.
It is vital for Serbia’s economic growth to remain positive during this year and next, within the range of two to three per cent, given the current geoeconomic situation in Europe, but it must be stressed that – considering the needs of the population and the economy – these rates are significantly below the economic potential. The key elements when it comes to the long-term sustainability of Serbia’s economic growth, in addition to avoiding a spillover of the political crisis, are the issue of reducing the chronic foreign trade deficit through the improvement of the export structure, but also boosting the living standard of the population, which includes, but isn’t exclusive to, increasing their purchasing power.
As things currently stand, inflation will continue to slow in Serbia, only to reduce to within the limits of the NBS target of around 3% during the second half of next year. A similar conclusion is also indicated by the latest IMF report, which envisages average annual inflation in Serbia at the level of 5-6% (2024). Under the scope of macroeconomic stability, we should emphasise the single-digit unemployment rate (9.6%), which should decrease slightly over the medium term. However, the fact remains that a significant section of the unemployed population is represented by a section that has been rendered completely passive in economic terms, so it is essential to apply state aid measures to activate that part.