The Ukrainian crisis will reduce the rate of economic growth in Serbia

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The war in Ukraine and the energy crisis will reduce the rates of economic growth in Serbia, which will have to give up its neutral status in the application of sanctions against Russia due to the dominance of politics over the economy, and the world is moving towards a bloc division.

“Serbia can expect low rates of economic growth, and even stagnation if the war in Ukraine and the energy crisis continue,” said Bojan Stanic, assistant director of the Sector for Strategic Analysis of the Serbian Chamber of Commerce.

He said in a debate within the Economic Talks Foundation project that Serbia’s economic growth is based on exports and attracting foreign investors and increasing employment.

“It seems that this model works, after the crisis with the Kovid 19 pandemic, Serbia recovered quickly and last year’s growth was 7.5 percent.” “The economy is currently facing the main problem, and that is uncertainty, while the main risks are the length of the war in Ukraine and demography,” Stanic said.

He estimated that Serbia should receive a certain number of refugees “because if 500,000 of them were accepted, it would be equated with the demographic picture in 2012.”

He said that the increase in the number of inhabitants is important, not only because the departure of the domestic population abroad loses workers, but also consumers.

Asked whether the fourth package of EU sanctions against Russia would also apply to Serbia, he said that he hoped that Serbia would be exempted.

According to him, the EU is ready to accept economic losses for the sake of political goals, and a ban on oil imports would cost Serbia dearly.

Stanic said that there are several scenarios in the event that EU sanctions apply to companies with majority Russian capital, such as the Oil Industry of Serbia (NIS).

“I hope that the company will be exempted from EU sanctions against Russia, otherwise one of the solutions is for the state to take over the majority package of ownership in that company, as in the case of Sberbank,” Stanic said.

He added that, if the war ends quickly, with a diplomatic agreement, the economic decline in Europe could be around one percent, and if it lasts, the price of oil will jump to 150-200 dollars per barrel, and economic growth in those countries will be lower of three percent.

As he said, Serbia could find alternative markets for Ukraine, where there is a war, and Russia, whose market is increasingly difficult to reach, if it turns to North African countries.

Asked whether Serbia will be able to remain undecided and resist EU pressure to impose sanctions on Russia, Stanic said that if it is forced to do so, the domestic economy will suffer the consequences.

Professor of the Faculty of Economics in Belgrade, Predrag Bijelić, said that Serbia’s cooperation with the EU is still stable and that it has the potential to expand due to the free trade agreement.

“One analysis showed that Serbia’s foreign trade with the EU exceeds even the volume of trade with CEFTA countries,” Bijelić said.

He added that Serbia has no obligation to harmonize its policy with the EU and that there is no such mechanism until it becomes a member of that community, and even when it becomes, policies are harmonized.

“Serbia, if possible, should maintain a neutral position towards the EU and Russia, and if it has to decide, instead of staying aside, because it is closed as in a ‘pocket’ and because the world is going to a bloc division, it will be it is a pity for everyone “, said Bijelić.

According to him, the International is the first to be pushed into a corner and even the World Trade Organization is introducing barriers, which speaks of a global redistribution of power.

According to him, a new architecture will have to be established in international organizations after the wave of the crisis, because China has strengthened and a new international order is being formed, and the biggest problem is the crisis of society’s morale, which is why the agreements are not respected.

The director of the Center for European Policies, Ranka Miljenović, estimated that Serbia will have to decide “in which direction it is going because politics dominates the economy”.

“I believe that it could be a mistake in the global system of bureaucracy in Brussels to punish Serbia with sanctions intended for Russia. However, the pressures are growing and according to information coming from the EU, we are only waiting for the elections in Serbia on April 3. He asks the government to obey European policy, “Miljenovic said.

She pointed out that the EU market provides the greatest opportunities for Serbia and that the state should help the economy to raise standards and harmonize with the regulations of that community in order to be as competitive as possible on their market.

Asked how scared the EU is about rising inflation, Miljenovic said that Europe does not ask how much energy prices will rise because it is looking for a replacement for energy of Russian origin and for the period when the war in Ukraine ends.

“Europe will find a way to help the endangered sectors of the economy with state measures due to inflation, value added tax has been reduced in Poland and Croatia, Hungary has frozen the prices of certain foods so that the population can feel the least possible consequences,” said Miljenovic, Nova reports.