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Dejan Vladić, Minister Counsellor, Slovenian Embassy To Serbia

Cautiously Optimistic

People in both Slovenia and Serbia are very motivated and eager to resume their work from where they left it at the end of February. Our annual trade exchange amounts to 1.5 billion euros and I expect it to stay at the same level this year while increasing again in the next year

The pandemic has been a global occurrence, hitting all the economies of our intertwined world hard. Given that Slovenia is an export-orientated economy, exporting more than 80% of what it produces, it is immersed in global value chains and has thus been hit by the global crisis.

“It is believed that our economy will shrink in 2020 by between 5.5 and eight per cent. The European Commission predicts a seven per cent dive of our GDP in 2020 and growth of 6.7% in 2021. The EBRD predicts a fall of 5.5% this year and growth of five per cent next year. The IMF and the Slovenian Office for Macroeconomic Analysis predict that Slovenia’s GDP will shrink by eight per cent, while in 2021 our economy should grow by five per cent,” says Dejan Vladić, Minister Counsellor at the Embassy of Slovenia to Serbia.

“Therefore,” he notes, “there is no correct answer what shape Slovenia’s economy is in exiting the quarantine. Some industries, such as tourism, have been struck more, while among companies it is the self-employed that got hit the hardest. Others have come through it in a fair state.”

The economy would have been worse off if our economy hadn’t prepared well for the next meltdown after the financial crisis of 2008, concludes our interlocutor.

To what extent did the rapid financial assistance provided by the Government and through EU channels help in the preservation of jobs and liquidity?

– In order to control and mitigate the consequences for the economy, the Slovenian Government adopted intervention measures aimed at preserving jobs, improving the people’s social situation, providing emergency assistance to self-employed persons, keeping businesses operational, improving liquidity and providing aid to agriculture.

Assistance was timely and effective, especially for those in dire need, such as the self-employed, for whom the government covered basic monthly incomes amounting to 70 per cent of the net minimum wage, writing off contributions and suspending the prepayment of income tax. In order to keep businesses operational, government assistance provided for all contributions to pension insurance for employees.

Slovenian companies are now expecting Serbian workers to return. Demand for workers has not changed, especially in tourism and industry

In order to improve the liquidity of businesses, the government offered purchasing claims against Slovenian companies, suspending the prepayment of corporate income tax and the payment of self-employment income tax, reducing deadlines for payments to private suppliers in the public sector and redirecting unused ESF funds.

To preserve jobs, government measures were set to co-finance wage compensations, provide for the rewarding of employed persons and activated sick pay and additional funds for already subsidised employment in critical sectors during the epidemic. The government stepped in to secure the status of employees who are unable to work due to force majeure, providing unemployment benefits from the first day of unemployment, waiving the payment of fees for public services and providing a solidarity bonus for pensioners. Assistance was also offered to the agriculture sector.

Which industries that are important for our two countries could recover first?

– Slovenian and Serbian exports are both strong in machinery, transportation, metals, chemicals, plastics and rubber production. Those industries prepared well for the crisis and have been recovering first, but those supplying the automotive industry are now struck with reduced demand. the financial sector, such as banks and insurance companies, are among the first to exit the quarantine, and importantly are strong, too.

Are there estimations about the impact of the pandemic on the mutual exchange of goods and services between Slovenia and Serbia?

– It is always unfair to predict anything, but due to pandemic measures our borders were closed for a few months, people were not as active as before and were mostly isolating themselves, resulting in lost months that will definitively reflect in reduced trade exchange. But I believe we can be optimistic when it comes to economic recovery. The crisis hit us due to non-financial reasons and brought business activities almost to a standstill overnight.

People in Slovenia and Serbia are very motivated and eager to resume their work from where they left it at the end of February. Our annual trade exchange amounts to 1.5 billion euros and has been growing consistently each year, and I expect it to stay at the same level this year while increasing again in the next year.

Dejan Vladić

It is hard to be optimistic when it comes to tourism this year. Tourism between Slovenia and Serbia has been growing annually by ten per cent and the pandemic will surely cut these numbers. In 2018, 138,000 Serbs visited Slovenia and this will hardly be the case in 2020, since the borders were closed and the Slovenian border still remains closed, with some exceptions.

What are the most important issues now when it comes to the restoration of regular business activities between our two countries?

– Regular business activities will be possible with the reopening of the borders. Serbia’s border is now open for foreigners; there are no conditions to enter Serbia, except for being healthy. That is not the case with the Schengen border, where restrictions, conditions and exceptions still apply. My experience tells me that people from Slovenia and Serbia are eager to travel, meet and cooperate.

I am seeing again an influx of Slovenians coming to Serbia on business, while unfortunately, it is still not possible for the Serbian business community to travel on business to Slovenia. I believe this will change soon, though, when numbers of those infected daily with Covid-19 in Serbia remain low for some consecutive days. In the recent past, many Serbian citizens headed to Slovenia to find better-paid jobs.

How will the current situation influence the demand for Serbian workers in the period ahead?

– I believe that Slovenia has been appealing to Serbian workers traditionally, as well as vice versa; Slovenian companies have been pleased to employ Serbs due to their professionalism, warmth and dedication. This will remain the case. Closed borders left many workers outside their borders and workplaces. Slovenian companies are now expecting Serbian workers to return. Demand for workers has not changed, especially in tourism and industry.

What are the most important diplomatic activities when it comes to the restoration of economic activities between the two countries?

– During the isolation period, I realised that it is important to keep contacts alive. Another task was to mitigate between Slovenian and Serbian businessmen when they were unable to travel and meet in person. Namely, online connections are nice to have, but we all agree that it is impossible to strike up new business deals without personal contact. Trust is a shy animal and it is tamed with personal contact and time. We were also in regular contact with state institutions when it comes to restrictive measures and the easing of travel restrictions.

For the restoration of activities after the crisis, diplomats need to scan the whole horizon, check the situation on the ground and plan for meetings to work on open issues, plan for establishing new acquaintances and plan, together with the business community, for new projects in a changing environment. Diplomats also need to be slightly pushy while at the same time safe, and to motivate people to emerge from their trenches and resume their activities where they left them.