The crisis caused by the Covid-19 pandemic will affect the Serbian economy primarily through the processing industry, with the export and production of durable goods being of special importance, the World Bank estimated in a report published today.
Producers-exporters employ by far the largest number of workers of all sectors that could be affected by the crisis. There could be a negative effect of the wave because the demand for exports is falling and logistics (such as imports of raw materials) are becoming more complex.
“In addition, demand for durable goods often declines sharply in times of crisis,” the World Bank report said, examining the impact of Covid-19 on fiscal policy, the financial sector, the foreign trade sector and the private sector in the Western Balkans.
It was pointed out that in Serbia, almost half of all employees in companies that export work in the sector of production of durable goods, and 86 percent of producers of durable goods also export – which complicates the possible negative effects.
“In the field of crisis-facing services, sales of non-essential products represent the sector with the most employees. However, the number of registered workers in this sector is only about one-eighth of the number of employees in exporting producers,” said World Bank experts.
Fewer workers are employed in the services sector, but, as they estimated, 90,000 employees in the activities related to food and accommodation and 120,000 in the transport sector will still feel the negative effects, while most companies affected by the crisis employ less than 50 workers.
“Businessmen will have to adjust their business models to the ‘new normality’. This type of crisis has two phases, an epidemic and a recovery. However, given the risk of several consecutive waves of Covid-19, these two phases may be repeated. In the first phase, it is necessary is to provide immediate support ‘so that the lights do not go out’, especially for sustainable firms to be able to retain human resources and talented workers so that they can quickly reach the pre-crisis level of business in the recovery phase,” the World Bank report said.
It adds that “policy makers should offer both financial and advisory support to enable entrepreneurs to adapt to new business models. Access to finance should not only be about overcoming liquidity problems, but also about providing sufficient funds for investing in potentially risky adoption of new ones technology and innovation.”
“Uncertainty caused by the crisis caused by Covid-19 may make it difficult to access loans in the private sector. Among the possible answers to this problem are credit guarantees and expanded credit factoring programs. These measures can be supported by business advisory services and assistance for innovation and entrepreneurship, which can direct companies towards new business models and technologies by giving them access consultants, experience and expertise,” the World Bank report said, Novi Magazin reports.
