The Serbian economy between Trump and the EU - from a cough to a cold

The prelude to the panel was a lecture by the famous British author and analyst of geopolitical relations, Tim Marshall, who spoke about the changes in the multipolar world, the influence of geography on international relations and gave a specific view of the direction in which global politics is moving.

Full professor of the Faculty of Economics and the Faculty of Political Sciences and the former ambassador of Serbia in Washington, Ivan Vujacic said on the panel that the European Union has lost its political weight and that it has various problems in its own backyard.

President of the Executive Board Raiffeisen Bank, Zoran Petrović reminded that Serbia has 60 percent of its exports to the EU and that it is not good when the economic prospects for your key economic partner are not good.

"If the EU coughs, we can also get sick." On the other hand, Serbia did some things smartly and took advantage of the fact that the Chinese saw that they had to get a little closer to Europe. It is good that there is some kind of diversification, that investors from the UAE are coming. It's not good to keep all your eggs in one basket," Petrović said.

A bigger unknown than the state of the economy in the EU comes from the other side of the Atlantic. The stock markets immediately reacted to the news of Donald Trump's election, and the dollar strengthened against the euro.

The executive director of "Imlek" and co-owner of "Nektar", Bojan Radun, points out that none of the markets in our region is directly dependent on exports to the USA, but he points out that the biggest market for us and our neighbors is Germany, and for Germany America.

"If the introduction of tariffs towards Europe happens, we can be collateral damage, that our exports to the EU and indirectly to the USA will fall, which may result in a fall in purchasing power and a fall in economic activity." The decline in economic activity in Germany may bring some people back to us and strengthen the labor market. If some big markets come to surpluses and placement problems because they 'lowered the ramp', we can be a part of the territory for solving those surpluses", said Radun.

Imposing and breaking rules

Ivan Vujacic says that it is interesting that the USA, which imposed certain rules, has started to break those rules.

"That's what Trump did when he declared a trade war with China." Now we will watch the second part of that game. Even the US's allies no longer knew what America was and how to position themselves. Not only did the bipolar world disappear, but so did the ideology. Biden's attempt to restore the narrative of democracy against autocracy is empty and insufficiently convincing, which also applies to the EU. Ideologies are gone, power remains," said Professor Vujacic.

Zoran Petrović reminds that the capital market reacted to Trump's victory so that the S&P Index approached its historical maximum.

"Trump is an old man and he is interested in how the capital market reacts because, unlike other parts of the world, in the USA 70 percent of all financial needs are not solved in banks, but in the capital market." He announced new tax breaks, brought in Elon Musk, who will deal with "cutting the bureaucracy". It's good for business – reducing red tape and speeding up the issuance of permits. Expectations are that corporate profits will be better and that economic growth will be better than it was under Biden," Petrović said.

According to him, one of the consequences of Trump's election will be near-shoring, production closer to the west and the shores of America, but we will also see that the Chinese are slowly accepting those markets.

Bojan Radun points out that real business reacts to high politics reactively, not proactively.

"When we have such changes, the management in the real sector reacts so that you open your eyes." High policy can affect the cost and availability of capital, and those changes affect changes in investment, which cannot happen in three weeks. The competitive environment may change and probably the protectionist measures being announced will change something. It is a domino effect, if some markets are closed to large companies they will look for alternatives and this can affect smaller markets. The third thing is consumer sentiment. We have seen this change in mood in direct consumption, but that will also return very quickly," said Radun.

Migrants and tariffs

Ivan Vujacic states that one specific characteristic can be seen in Trump - loyalty to him personally and his policy, towards migrants and the introduction of tariffs.

"There will be contradictory things - inflation in the US and the budget deficit." "Wall Street reacts immediately, but the question is what will be around the corner," said Professor Vujacic.

Zoran Petrović points out that today 50 percent of illegal migrants work on American farms.

"Who will replace those hands and how much will those hands have to be paid for?" In other words, a lower labor supply, higher labor costs, all of that will "push" inflation upwards in the US. America itself will finance the budget deficit with interest rates that will be higher than if such a policy were not pursued, and that will be the price," pointed out Zoran Petrović and added that developing countries will have the biggest problem because they will need more local currency to buy dollars. in order to pay their debt.

Expectations for Serbia

Zoran Petrović expects that Serbia will have good growth next year.

"It will be weak in the EU, and America continues at the same pace," Petrović said.

Bojan Radun has positive expectations for 2025, but adds that we should not forget that we have not yet returned to the period from 2019 or 2021.

At the conference, where domestic and foreign economic analysts spoke, the latest trends in marketing were presented by Simon Lamy, strategic marketing advisor of the global consultancy WARC.