Balkan Business Brief

Strengthening economic ties: Serbia and Great Britain collaborate for prosperity

Serbia and the United Kingdom are taking significant strides towards enhancing their economic cooperation. The Serbian Chamber of Commerce and the British Embassy are collaborating to promote the financial mechanisms offered by the UK Export Finance agency. Their focus extends to fostering cooperation between Serbian and British companies, particularly in the service and IT sectors. The partnership aims to leverage UK Export Finance's resources, which offer over 12 billion euros for projects in Serbia and the region, including joint ventures in third markets. This collaboration paves the way for an exciting future of trade and investment opportunities.

The increase in merchandise exchange between Serbia and the UK, rising by 172.6% over the last 11 years, underscores the growing rapport between the two nations. In the realm of services, the UK has emerged as a vital partner for Serbia, securing a positive balance year after year. This cooperation not only benefits both countries but also contributes to the wider Western Balkans region's appeal as an investment destination. The efforts to strengthen these economic ties promise to be mutually beneficial, forging a prosperous path for the future.

Serbia's Science Fund boosts cutting-edge research with €25 million in funding

Serbia's Science Fund is set to propel the nation's scientific community forward with a budget of 25 million euros, funding 97 cutting-edge projects over the next three years. This ambitious initiative involves 898 domestic scientists from 91 research organizations, covering an extensive spectrum of research domains. Under the PRIZMA program, these experts will pioneer research in artificial intelligence, biotechnology, biomedicine, and technical sciences. Furthermore, they aim to develop innovative solutions in fields like recycling mining waste, disease prediction with artificial intelligence, and advanced sensor materials. The importance of the program extends beyond the national scale, with global significance. The European Union is a key partner, injecting 31.5 million euros into the project. This collaboration underscores the critical role of science and research in shaping Serbia's future, facilitating essential reforms and enhancing the nation's competitiveness.

The company from Bosnia and Herzegovina has a vital role as a partner for Tesla

In the German factory "Pass," located in Bosnia and Herzegovina, the production of parts for the world-famous Tesla vehicle brand recently commenced. The company has highlighted that the production process is more demanding than others because it involves the use of robotic machines in manufacturing. Throughout the entire production process, employees at the Pass company received assistance from experts from China, with whom they refined the production process. The company mentioned that they currently employ around 1,100 workers, but their production capacity will require additional workforce, so the company will continue with the recruitment process. In addition to the new production process initiated for Tesla, the company "Pass" manufactures parts for many well-known global brands such as Porsche, Jaguar, Volkswagen, Audi, Volvo, and Mercedes.

Despite the high risk, earthquake insurance levels in Croatia are very low

In the wake of two devastating earthquakes, the significance of insurance in Croatia appears to be dwindling. While the number of earthquake insurance contracts increased by 43.4% in 2021, the urgency of such coverage has faded in 2022. The European Insurance and Occupational Pensions Authority (EIOPA) highlights Croatia's high exposure to uninsured risks like storms, fires, floods, and earthquakes. This raises questions about the nation's preparedness for future natural disasters.

The data shows a worrying trend - new insurance contracts mainly cover property, not health, suggesting a focus on asset protection rather than well-being. In the first half of 2023, Croatia's total insurance premium (excluding mandatory auto insurance) reached a substantial figure. However, earthquake insurance accounted for only 1.6% of the total, with a meager average premium of 3.6 euros per inhabitant. The average premium for earthquake property insurance is 109 euros per year, but the demand for it is very low. A very important question that should be considered is whether the decrease in insurance contracts for natural disasters is due to a belief that catastrophic consequences will not occur in the future or because insurance premiums are perceived as too high compared to other rising costs.

Serbia inches closer to investment-grade rating

Standard & Poor's has reaffirmed Serbia's BB+ credit rating, maintaining stable prospects for an upgrade. Despite global economic challenges and declining external demand, Serbia remains on the brink of achieving an investment-grade rating. Key factors cited in the report are manageable public debt levels, a credible monetary policy framework, and the expectation of reduced inflation by 2024, partly due to a stable dinar-euro exchange rate. Serbia's robust banking sector, strong capital adequacy, and historically low problem loan rates were also commended. With a significantly reduced current account deficit, Serbia expects to attract substantial foreign direct investments. Serbia's ongoing efforts to navigate international uncertainties with favorable domestic trends and sound economic policies are acknowledged. This progress underlines the importance of interest rate decisions and foreign exchange reserves, as well as the dinar-euro exchange rate stability in the country's overall economic environment.