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Serbia’s trade shift: Rising exports to China and Turkey amid declining demand in the EU

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The German economy experienced a contraction of 0.2 percent in 2024, marking a year of recession. Although demand in key sectors has fallen, Germany remains Serbia’s largest foreign trade partner. Meanwhile, trade exchanges with China and Turkey are on the rise, helping to offset the decline in demand from the European Union and contributing to an increase in Serbia’s exports, according to RTS’s report on alternative markets for Serbian exports.

Serbia’s foreign trade saw a boost in both imports and exports over the past year. The total value of foreign trade reached $68 billion in the first 11 months of 2024, as reported by the Bureau of Statistics. The European Union remains Serbia’s primary trade partner, accounting for 58 percent of the trade, with Germany leading, followed by CEFTA countries.

While exports to Germany, Serbia’s largest trading partner, have begun to decline, exports to Italy—Serbia’s third-largest trade partner—also decreased. In contrast, trade with China, now Serbia’s second-largest foreign trade partner, has surged, with exports to China rising by 80 percent. Exports to Turkey have also shown significant growth. As a result of these shifts, trade with Russia has decreased by half a billion dollars, reflecting a broader decline in Serbian trade with Russia.

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Bojan Stanić, from the Serbian Chamber of Commerce, noted that while Serbia’s exports to the EU have been decreasing, the growth in exports to China and Turkey, in addition to the reduced trade with Russia, has helped mitigate the effects of lower demand from European markets. He pointed out that Serbia’s exports to China have grown by 80 percent in comparison to the previous year.

Predrag Bjelic, a professor at the Belgrade Faculty of Economics, emphasized that while China’s market is expanding, it cannot entirely compensate for the losses from other markets. He added that in the context of EU relations, the free trade agreement and the convention on the accumulation of origin are crucial for Serbia’s trade, especially when dealing with global supply chains.

Although Serbia experienced a decrease in foreign direct investments from Germany last year, with capital being withdrawn, there were no major closures or layoffs. Stanić stated that the German economy is strong enough to withstand the recessionary pressures, and recovery is expected to begin around 2026.

As Europe faces an uncertain economic future, Serbia’s trade policy makers are increasingly turning toward the East. Following China’s rise as a trade partner, Serbia is planning to sign a free trade agreement with South Korea and explore markets in Southeast Asia. Jagoda Lazarevic, Serbia’s newly proposed Minister of Internal and External Trade, emphasized that while Serbia will continue to prioritize its economic ties with the EU, given its strategic importance, it is necessary to seek alternative markets due to the geopolitical and economic disruptions.

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Despite these positive developments in exports, Serbia’s imports have outpaced exports. Imports rose by 20 percent, compared to a slower growth in exports. Nonetheless, Serbia still maintains a surplus in trade with neighboring countries like Montenegro, Bosnia and Herzegovina, and North Macedonia, mainly exporting cereals, food, beverages, oil, and electricity to them.

This shifting landscape in trade, along with Serbia’s increasing focus on alternative markets and strengthening ties with Eastern countries, reflects the nation’s strategy to diversify its trade relations and mitigate the impacts of the global economic downturn.

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