In 2022, industrial production was in the positive and had a growth of 1.8 percent, but that growth was “pulled” by mining, while processing slowed down, Bojan Stanić, assistant director of the Sector for Strategic Analysis of the Serbian Chamber of Commerce, told “Politika”.
According to his words, the exploitation of ores grew from 22 to 23 percent in 2022 compared to 2021, and the processing industry only 1.5 percent.
– It is worrying that in the last four months of last year we have a decline in the processing industry. Mining accounts for two percent of the GDP, and the share of the manufacturing industry is 13 percent. It is important to emphasize that the processing industry is falling due to the slowdown of the European economy, which is the main market for our products.
It will probably be the case this year that we have less activity in the first half of the year as far as industrial production and exports are concerned, and that a slight recovery will begin in the second half of the year, considering that according to the IMF report, it is expected to move towards higher growth rates in 2024 – says Stanić.
The fact is that industrial production is dragged down by mining, which is associated with environmental problems, and the higher stage of processing simply loses in the structure of production and exports, which does not correspond to our foreign trade deficit. It was 11.4 billion euros last year, mainly due to the increase in energy prices, but also due to the growth of all imported products on which Serbia depends, which was a consequence of inflation.
Stanić notes that the chemical and metal industries are the basis of our exports, however, within those activities, Serbia has a lower stage of processing.
– Bearing in mind the situation in Europe with the crisis, those activities that have a higher stage of processing are more affected, therefore it should not have a greater impact on Serbia’s exports this year – believes Stanić.
In the January issue of the “Macroeconomic Analysis and Trends” newsletter, the analysis “Is 2023 the year of the recession” was published, in which it is stated that the European industry will be the biggest victim of the conflict in Ukraine, the energy crisis and inflation. Metal production and the chemical industry, which by their nature are the most energy-intensive, stand out as the biggest losers.
The process of smelting and processing metals requires huge amounts of energy (mostly gas), which together with the falling prices of metals on the world market leads to a drastic drop in the profitability of these sectors.
In Serbia, a negative trend was also recorded, the production of basic metals shows a drop of about 15 percent in the period January-November 2022, and the production of chemicals by five percent. The extremely unprofitable business model in the metal and chemical industry has forced corporations to reduce production or even close plants.
If such a situation were to be prolonged, European companies would lose their market share in the world and their place would most likely be taken by China. Therefore, it is a medium-term or even long-term loss for the entire continent.
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