Slow recovery rate of Serbia industry since 2000, what remains to be changed?

, News Serbia Energy

Average rate of industry development since 2001 until 2012 amounted 0,4% and it was below average rate of industrial growth of 3,4%.

“Inherited industrial problems and sudden liberalization of market followed by sharp real strengthening of dinar are the main reasons for weak recovery of industrial production and its stagnant moving in the first decade of the new millennium”, medias reported.

Growth rates of industry were characterized by extreme instability and high oscillations. Average grow rate of industry since 2001 until 2012 amounted 0,4% and it was below average rate of industrial growth of 3,4%.

Considering the fact that industry growth was slower than growth of total amount of domestic products and other activities, services’ sector first of all, reindustrialization process is strengthening during observed period. This will make many unbalances and system deformations in industry- it is stated in analysis of “Industrija Srbije nakon 2000.godine” (Serbian Industry after 2000) of Ivan Nikolic, collaborator of Economy Institute.

Modest recovery of processing industry of almost 17% to financial crisis 2008 probably represented one of the biggest disappointments after 2000. Only Macedonia has recorder lower result. However, the real shock hasn’t happened yet. Production will be drastically adjusted downward and it will be once again returned to pre-transition level from 2000- Nikolic stated.

Serbian industry is characterized today by such a low level of activity that some production areas are endangered. The most branches don’t have sustainable growth rate and all of them are financed by borrowed sources that big interests are being paid for- almost 20% on annual level with course indexation.

Risks of over-indebtedness are enormous. Many companies are facing bankruptcy and industry does not invest in its business or predicted equipment amortization which makes it completely technologically inefficient and unprofitable.

Industry structure is inadequate and it is based on working and resource intensified sub-sectors. Results accomplished so far in the process of pre-reconstructing industry as well as structure of existing offer can hardly influence on productivity growth, competitiveness and appropriate performance on foreign markets more dynamically.

Therefore, increase of total productivity and industry efficiency i.e. competitiveness are connected with the changes in production structure.

The biggest fall in production was in textile industry. Its fall is constant so this industry is reduced to only tenth part of activities from 1980. Electronic industry has because of big achieved production which is around 4,5 times lower than 1980 contraction during 90s, despite production which is 46 times bigger than in 2001. Economy crisis from 2008 terminated even mild recovery in production in areas of furniture industry and motor vehicle production which had been present during the mid of the last decade. Production level in these two areas is approximately lower for 60% than in 1980.

As it is noticed, the growth of some areas is unexpectedly modest and insufficient and nonmetal mineral production and tobacco industry are emphasized. Nonmetal mineral production represents cement plants privatized in 2002 and the tobacco industry in Nis and Vranje will be privatized the next year.

Electronic and machine industries have leaded the group of processing industry with lowest results until 2008 which is being improved since the arrival of Slovenian Gorenje in Valjevo.

Main representative of the area with many years’ and constant loss is textile industry.

The area of processing industry so called transition winner is production of standard metal products except for machines thanks to extraordinary breakthrough since 2008.

Activity carriers in this area are companies Kolubara Metal-Vreoci, Alfa plam-Vranje, Prvi Partizan- Uzice, Krusik- Valjevo, Sloboda- Cacak, Zastava oruzje- Kragujevac. This is mostly dedicated industry so its results can be prescribed to good investment policy and state help- it is stated in the analysis.