Italy’s situation reflects on Serbian economy

Italy’s health care and the economy suffered during the first wave of the pandemic, and today the country is further affected by even stricter measures.

Considering that 1,600 Italian companies operate in Serbia and that Italy is the second biggest trade partner to Serbia, after Germany, this information also affects our country.

Italian companies in Serbia employ more than 50,000 workers, of which 39,000 are directly employed and 12.000 are employed as spin-off or leased out workers. There are also important Italian investments in Serbia worth close to 154 million euro.

According to the data collated by Confindustria, Italy has both large and small and medium-sized companies in Serbia which are engaged in various sectors: agriculture, automotive, textile and clothing production, IT, as well as the production of industrial products, consultancy services, catering, banking and insurance.

Economic experts agree that Serbia will definitely feel the negative consequences that befell European economies. They have said this practically since the beginning of the pandemic, saying that Serbia “is not a happy island” and that it is largely dependent on external partners, primarily Italy and Germany.

Professor of the Faculty of Economics at the University of Belgrade, Ljubodrag Savić, said back in March that, among other things, the automotive industry could be affected in terms of production continuity, as Fiat is the largest Italian investment in the country.

“A lot of car components come from Fiat’s factories in Italy, and we also have a lot of Italian factories that produce vehicle parts, seats and cables. Disrupting this supply chain will definitely affect the operations of these factories. Supply is the main problem,” Professor Savić maintains.

Experience has shown that the crisis often leads to layoffs in subsidiaries outside the home countries. For example, during the great crisis of 2008, the French President was quoted as saying: “We will reduce the workforce because of lower demand,” referring to jobs in Romania and Bulgaria.

Until recently, the Italian authorities have been trying to avoid a complete lockdown of their country, but this is becoming increasingly difficult to implement. That is to say, the government is “walking on thin ice” as the crisis deepens.

Discover the most important foreign investments in Serbia in 2019: click here!

The slogans about the economy’s resilience, promoted during the first wave of the pandemic, gave way to a feeling of fatigue, which turned into anger at the end of October, when the government announced a new shutdown.

The October and November protests of small business owners and restaurateurs, as well as freelancers and seasonal workers in the hospitality and tourism sectors, have so far not turned into a mass movement, in part because the government quickly announced new economic bailouts. However, dissatisfaction is palpable, and the government faces the challenge of striking a balance between protecting the health of citizens and the country’s economy.

The Italian Central Bank estimates that the country’s debt, which is already the second-largest in the European Union, after that of Greece, will reach 158% of GDP as the crisis deepens. Although Italian debt is on the rise, interest rates are being kept low.

Recently, the Italian Prime Minister, Giuseppe Conte, appealed to citizens to avoid going on skiing holidays during and after Christmas season in order to contribute to the fight against the spread of the coronavirus, which has so far killed more than 50,000 people.

This appeal has caused a great controversy, considering that Italian ski resorts generate a turnover of about $11 billion each year and a third of that amount is generated during the Christmas and New Year’s vacations.

(Blic, 14.12.2020)

This post is also available in: Italiano

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