The extent to which the Serbian economy will be hit by disruptions to supply chains will depend primarily on the speed of curbing the spread of the virus among employees, for which high-quality health and safety measures at work are crucial.
Global supply chains have flourished around the world in the last two decades, thanks to reduced costs of trade and transport, but also to ICT advances and the simplifying of cross-border transports of goods and services. Despite the negative impact of the global economic crisis of 2008-2009, according to the estimates of the International Labour Organization, slightly more than 450 million people were employed in global supply chains prior to the outbreak of the Covid-19 pandemic.
China, which was the first country to be hit by the Covid-19 pandemic, represents one of the most important players in global supply chains, as a primary producer of final products and components, a large global buyer of raw materials and industrial products, but also as one of the most important markets for consumer goods. This country’s fall in industrial production of about 13.5% in January and February this year, and the even greater fall in exports were felt by economies around the world, including the production of Fiat Serbia, which had to be temporarily suspended work due to a lack of components from China.
It is especially important to demonstrate the digital transformation of the economy, because it not only enables the reducing of costs, but also the managing of the risks of new disruptions.
It is still too early to make any quantitative assessment of the effects of supply chain disruptions caused by the pandemic, but it is clear that the economies of all countries will have to endure at least two negative impacts of this global disruption: the first is certainly limited (or almost non-existent) possibility to produce at a large number of plants due to the ban on movements; while the second is the decline in demand within the scope of the supply chains through which these companies place a significant part of their production. If forecasts of an economic downturn in multiple economies that are significant players in global supply chains come to pass, the cumulative effect of supply difficulties and falling demand could lead to a negative spiral in many economies where production is carried out for global chains. It is already estimated that foreign direct investment at the global level could fall by 30 to 40 per cent during 2020-21.
Serbia is not a developing country, but rather a mid-developed country that aspires to join the European Union – an alliance of a large group of economically advanced democracies. The extent to which the Serbian economy will be hit by disruptions to supply chains will depend primarily on the speed of curbing the spread of the virus among employees, for which high-quality health and safety measures at work are crucial.
The need to preserve production and investment in the wake of the consequences of the pandemic could act as an incentive to improve the efficiency of public administration and legal security. It is especially important to demonstrate the digital transformation of the economy, which has been discussed in Serbia for a long time, and which in these circumstances is important not only because of reduced costs but also because of the visibility of companies within supply chains and managing the risk of disruption; which is why digital access to data should be provided and work should be carried out on the adoption of regulations that relate to electronic signatures and electronic transactions, which will help to make it easier to deal more efficiently with supply chain disruptions.