The coronavirus pandemic caused an unprecedented global shock, according to the Chamber of Commerce and Industry of Serbia (PKS).
As such, it had an impact on all sectors. Some economic branches were almost devastated, such as tourism, catering and transport, because their activities were blocked due to measures introduced to prevent the contagion.
On the other hand, a significant part of the manufacturing industry suffered from a lack of production inputs due to interruptions in the global supply chain and reduced international demand.
Still, certain economic activities in the manufacturing industry saw a rise in demand, mostly those which produce vital supplies, home cleaning products and medical and protective equipment.
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“According to the Statistical Office of the Republic of Serbia, industrial production in the first quarter of 2020 saw positive growth of 4.4% y-o-y, although half of the third month was under the state of emergency. On the other hand, during the state of emergency, a significant part of the manufacturing industry and the industrial potential of Serbia remained functional thanks to the organized transport of workers during the curfew and the relatively stable supply chain in production companies and the cross-border transport of goods, to which the CCIS, as the general representative of the business community in the country, gave a substantial contribution,” the assistant director of the Sector for Strategic Analyses, Services and Internationalization at the Chamber, Bojan Stanic, said.
Serbia handled the initial impact of the crisis well
After nearly 50 days of the state of emergency, the Serbian economy has started to recover.
The PKS underlines the importance of the government’s economic support programme in the sense of fiscal benefits, direct monetary contributions to the private sector and access to favourable loans granted by the Development Fund of the Republic of Serbia and the guarantee scheme agreed with commercial banks.
“The official data shows that the economy of Serbia handled the initial impact of the crisis well, that is, that the employment level was sustained, which was the primary goal of the government’s measures. According to the Chamber’s Survey of Business Activities of Companies in the Republic of Serbia, carried out on a representative sample of around 900 companies, most companies are not planning to reduce the number of employees in the second quarter,” Stanic adds.
Still, he adds, considering that the Serbian economy is working again and is integrated into the global supply chain, the economic situation in the upcoming period will depend on how quick the European economy will start to recover, as the EU countries are the key external trade partners of Serbia, as well as the potential second tide of the epidemic toward the end of the year.
“The banking sector in Serbia is very liquid, and most macroeconomic indicators are good (the interest rates are low, the exchange rate is stable, there’s expansive GDP growth in the first quarter of 5%). I would also like to mention that Standard and Poor’s has confirmed Serbia’s credit rating at BB+ with a stable outlook for further improvement. This rating shows that Serbia has maintained the macroeconomic stability and that the economy, in the structural sense, is better prepared compared to the 2008 financial crisis,” Stanic underlined.
Encouraging growth rate projections
Stanic also said this year’s projection of Serbia’s economic growth, given by international finance institutions, is around -3%, with a considerable jump projected for 2021.
“It is encouraging to see that the government has estimated that this year’s growth rate in Serbia will be more favourable, that is the domestic construction sector and a good part of the manufacturing industry will be stimulated thanks to the infrastructure projects implemented under the Serbia 2025 initiative,” Bojan Stanic concludes.
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