Is the government completely unprepared for the economic crisis?

The economic crisis caused by the coronavirus pandemic is slowly beginning to manifest itself and its negative effects will begin to be felt more and more, while economic experts in Serbia are not sure whether the new government has a strategic plan to combat it effectively.

Both economic analysts and trade unionists share the view that the current new pace of the epidemic will further complicate the situation and are sceptical that the government has an adequate response to the impending crisis.

Privatization advisor, Branko Pavlović, says that not only the Serbian government but also the whole world will have to face the negative effects that the virus will cause to economic activities.

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The president of the Sloga trade union, Zeljko Veselinovic, believes that the new government seems completely unprepared for the impact of the economic crisis in the autumn.

“All assistance measures were closely related to the election campaign. Apart from a one-off payment of 100 euro to adults Serbian citizens and assistance to employers whereby the state paid three-month-worth of the minimum wage, there is nothing else that that government planned, nor does it have a vision of what should be done in the upcoming period,” Veselinovic underlines.

Veselinovic adds that the big question is whether foreign employers will still be interested in investing in Serbia, regardless of the assistance provided by the state through subsidies, and he is convinced that there will also be redundancies:

“As far as industry is concerned, a lot of Serbian companies are engaged in the automotive industry, that is in the production of car parts or car seat covers. It is well known that the epidemic has particularly affected the automotive industry and, as a result, the existence of these automotive suppliers is now in jeopardy. I expect redundancies, and considering that the current government is unable to cope with the economic problems that are coming, I would not be surprised if salaries and pensions were reduced again.”

Economist Milan R. Kovačević argues that the epidemic, which has not diminished but has picked up pace recently, will lead to great economic decline in Serbia.

“The new government will have some extra resources that it will be able to use to fight the economic crisis. However, the expected economic growth will not happen. On the contrary, it will significantly decline. I think that the state authorities could have accepted the loans offered by international financial organizations. Instead, Serbia has borrowed 2 billion euro at high interest rates. It is necessary to pay back the money obtained through the sale of bonds, and no matter how much the Serbian authorities thought the state had the money for these, objectively speaking, it will be a problem to pay back the money under unfavourable conditions,” Kovacevic concludes.

(Danas, 24.06.2020)


This post is also available in: Italiano

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