An increase in exporting from Serbia expected by the end of 2016 – Modest economic recovery of the Eurozone might slow down this trend

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On the top 10 list of exported goods, the first place is taken by diesel cars, the second place belongs to electrical conductor sets for planes, vehicles and ships, followed by tires, corn, cigarettes, frozen raspberries, electric power...

According to the Ministry of Finance data, the interannual increase in exporting is for the most part due to an increase in exporting of electrical equipment, chemicals and chemical products and tobacco products.

This data is corroborated by the list of the largest exporters, in which Fiat is firmly on top, followed by Tigar Tyres from Pirot, Zelezara Smederevo, Philip Morris, HIP Petrohemija, Naftna Industija Srbije from Novi Sad, Tetra Pak, Gorenje, Robert Bosch...

The largest foreign trade partners are Italy and Germany. Exporting to those two countries made up for 30.2% of the total value of exporting.

Marko Danon, economist at Hypo Alpe-Adria Bank, says for eKapija that, in the past years, the exporting, along with investments, has become the key “carrier” of Serbia's economic growth, in contrast with the decreased contribution of private and public consumption.

- In the 2012 period, when the production started at the Fiat factory and most manufacturers of car parts and the NIS facility in Pancevo, there was a significant increase in the value of exporting, along with a change in structure, that is, an increase in the contribution of goods with a higher level of processing. In the same period the increase in importing was significantly lower, since it was limited by relatively low local demand. In such conditions, the trade deficit in 2015 reached 4.3 billion euros (around 13% of GDP), which is nearly 30% lower than in 2012, when it was about 6 billion (which is around 20% of GDP).

The trend of the increase in exporting, that is, the narrowing of the trade deficit, might continue into the second half of 2016, says our interviewee.

Good results are being expected in Gorenje too, which exported a EUR 50.8 mil worth of goods in the first four months of this year.

As they say for eKapija, the cause of the increase in sales and income in the first quarter of 2016 is an improved geographical structure of the sales, and the structure of the appliances sold, which was reflected through an increase in the average selling prices.

- In terms of geography, this means that we have improved the sales in the markets where it's possible to sell appliances at higher prices, namely the non-European markets and the Benelux states. The increase in sales was noted in certain markets of the Eastern Europe: Slovenia, Hungary, Slovakia, Romania, Bulgaria, Montenegro and Macedonia. The increase in sales in Russia and the Ukraine was especially significant and it exceeded our plans.

In the Western Europe, Gorenje had an increase in sales in the Benelux states, above all the Netherlands, where their market share has been increasing.

- We managed to widen the sales in Germany and Great Britain relative to the same quarter last year, but we are still behind the planned income for the first quarter of 2016. Lower sales were recorded in Scandinavia and France, under the Gorenje brand. Through increasing the sales outside of Europe, we are reducing our dependence on European markets and improving the sales structure, which means that we are increasing the participation of premium appliances sales and premium brand sales.

The business conditions in the markets in the first quarter are stable, says Gorenje, which is reflected in the scope of the business activities.

- Throughout this year, we will be focusing on realizing the activities whose goal will be to further increase our sales and improve the sales structure, which will primarily be done through the development of new products and innovations, optimization of the supply chain, continuation of the implementation of a lean organizational structure and a quality management system. We also emphasize that, in all our locations in Serbia, appliances for all markets and of all our brands are being produced.

“The injection” of money contributes to increased demand

Marko Danon says that the trend of the increase in exporting has been further intensified during the last year and the beginning of this year, for all intents and purposes, in accordance with the pronounced expansive policy of the European Central Bank.

- The program of “injecting” a large amount of liquidity through the program of quantitative easing, it seems, is contributing to the strengthening of demand in the countries which are Serbia's main trade partners. The export increased by 11.2% interannually (+7.8% in 2015, +1.4 in 2014) in the first three months of 2016, which exceeded the increase in importing, which was 2.8% (+5.6% in 2015, +0.4 in 2014).

Further growth, according to the data from the begging of the year, but also considering the recent investments in the widening of capacities, says Danon, could above all be expected to happen in the sector of car part manufacture (more precisely the manufacture of electrical equipment, rubber and plastic), chemicals, and tobacco products.

Still, according to our interviewee's opinion, the trend could be limited by certain risks coming form the international surroundings.

- The economic recovery in the Eurozone countries, which are Serbia's main trade partners, has been relatively modest since the beginning of 2016, whereas the growth in the big developing economies, like China or Brazil, has been noticeably slowing down, which might negatively affect the value and the scope of local exporting in 2016.

Marija Kambic