Serbia eyes larger EU quota, more infrastructure projects

Serbia is expecting balanced public finances with only a small budget deficit in 2020, giving the government the opportunity to invest into more steel-consuming infrastructure projects. However, EU safeguard tariffs are hampering Serbian steel exports and therefore its economic growth, according to Mihailo Vesovic of the Chamber of Commerce and Industry of Serbia.

“EU safeguards are the elephant in the room,” Vesovic told delegates at Monday’s Irepas meeting in Belgrade attended by Kallanish. The bloc considers Serbia a third country. However, HBIS Serbia is one of Serbia’s largest exporters and of strategic importance to the nation’s development, he continued.

“Also smaller producers in Serbia are facing big competition [… in exports to Europe]… from Turkey, Ukraine, from India… so they are having a problem to stay and survive in the market, and at the same time to be competitive,” Vesovic observed.

The Chamber and Serbian government are negotiating with the EU to secure a higher quota. “In July last year they [… the EU] said, ok, from this January there is going to be a 5% rise of the quota – we are expecting to push them a little bit higher because steel is one of the main export products coming out of Serbia and it’s one of the drivers of our economy,” Vesovic explained.

The country is also hoping to negotiate the removal of Kosovo’s 100% tax on Serbian products, he added.

The expectation is for Serbia to accede to the EU by 2025, although this could be delayed on account of the bloc’s own internal issues, Vesovic said.

Economic activity in the so-called “West Balkan 6” countries is on the rise, but the region suffers from a shortage in skilled workers. The Chamber is lobbying for a “… small Schengen” to provide free movement within the region.

Foreign direct investment has boosted employment, “… but to make it sustainable we need to have a much clearer goal of free movement of goods, people and investment,” Vesovic said. Improved connectivity of rail and roads, and the reduction of delays at borders could boost regional economic growth by 0.5-0.7%. However, this is a highly political process and will take time, he concluded.