Despite the energy crisis, the war in Ukraine, difficulties in global supply chains and turmoil in global capital markets, the global post-pandemic economic recovery continues. This is a key factor in maintaining solid economic growth in Serbia, based primarily on external factors — relatively strong growth in exports (5.7% in real terms in the first quarter of this year compared to the previous year) relatively strong inflow of foreign direct investments (FDI – 698 million euros net in the first four months). In addition, some domestic factors also played a significant role – such as a strong fiscal stimulus (deficit of 4% of GDP) in which increased spending on public investments plays a key role (read more about the macroeconomic framework in the Assessment of the NKEU Working Group for Chapter 17) . In both cases, that growth is very unstable. The global recovery is increasingly threatened by the efforts of key central banks to suppress inflation, which in May reached a level of 8.8% in the EU-27 (10.1% in Serbia) and is currently accelerating (hence the tremors in the capital markets). This threat alone is a grave threat for Serbia as well, because the global recession would hit us both through the reduction of exports and through the reduction of FDI that can happen due to the growth of global uncertainty.


Serbian economic growth is also threatened by other factors, above all the extremely short-term horizon with which the Government responds to an increasingly complex situation. The political effect of “closing ranks” that accompanies every war, including the one in Ukraine, was not used in Serbia to prepare citizens for long-term changes in the energy sector. Even if we manage to avoid shortages, an increase in energy prices is inevitable, and it should have already happened. For now, the increase in energy import costs, which in the first four months of 2022 amounted to 130 million euros for electricity, over 900 million euros for gas, and certainly a certain amount for the import of fuel oil, is “absorbed” by public companies — EPS, Srbijagas, and heating plants. In other words, it will come due in the future (which is very uncertain). Their prices for households and small commercial consumers have not been adjusted since the beginning of the crisis, and for larger commercial consumers only by one part (more about the “oil” formula” in the interview). On the other hand, the geostrategic ambivalence of Serbia in relation to the war in Ukraine can lead to the stopping of capital flows not only from the West, but also from other parts of the world.


 We do not see any preparation for the measures to increase energy efficiency, which could significantly contribute to the reduction of energy consumption and dependence on imports by the next, and especially the winter after. We also see no other measures that could contribute to “cushioning” the fiscal and economic shocks that are likely to continue to multiply. For instance, instead of bans on exports, with better management of commodity reserves, measures to support the provision of expensive fertilizers in order to support agricultural production would benefit the Serbian economy even in conditions of increasing prices of its products that will certainly be maintained in the medium term. In both this, as in the case of discrimination against domestic SMEs, in addition to the absence of political ideas/will, the issue is also the inability of institutions to act in a targeted manner (see interview).

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