GLOBAL PERSPECTIVES | KOMMUNIKATION GLOBAL - 01 | 2009

WINDOW ON EUROPE
Just When Hope Was at Hand
By Vesna Peric Zimonjic from Belgrade
The Balkans region, crippled by the wars of the 1990s and then
pushed through painful transition to a market economy, has been
hit hard by the global economic crisis just when everyone believed
the time had come for promising new development.
"For the first ten months of 2008, we have seen one of the best
economic years for more than a decade," Serbian Prime Minister
Mirko Cvetkovic said at a press conference in Belgrade Dec. 17.
"However, the effects of the worst global crisis seem about to hit
us as hard. This is a kind of crisis none of us has seen in our lives."
Thousands have been laid off across Bosnia, Croatia, Serbia and
Macedonia. Albania and Montenegro too have run into economic
stagnation over the past couple of months.
The hardest hit are the metal processing and textile industries,
together with tourism and services. The last two have been the big
boost for economic growth, particularly in Croatia and Montenegro.
"The region cannot avoid the global crisis," Nobel Prize winning
economist Joseph Stiglitz said on a recent visit to Belgrade. He now
heads an expert body for monitoring the financial crisis, set up by
the United Nations General Assembly in September.
"Some countries will be hit directly on the trade level, others because
of the fall of the price of raw materials," he said. "This crisis
began at the centre, in the U.S., but the periphery will be hit the
most, because exports and direct foreign investments will suffer.
The region depends on Europe, which will suffer even greater consequences
than the U.S."
"We are already witnessing that," analyst Goran Nikolic told IPS.
"Serbia relies on exports; food and raw materials such as copper
and iron make 40 percent of exports. The price of copper dropped
by half in the past two months."
Prime Minister Mirko Cvetkovic |Wikipedia
The international conglomerate Rio Tinto, potential investors in
the Serbia copper industry, announced in November that it will lay
off more than 13,000 people worldwide. "So, Serbia cannot expect much from there," Nikolic said. Similarly with plans to sell
Russia oil enterprises in Serbia worth some 400 million euros. With Russia also in recession, prospects for that sale are now
small.
Slowdown all around
Serbia's deal with the Italian company Fiat to revive the
car industry in the central town Kragujevac is also in doubt,
with Fiat struggling to survive at home. "If Serbia reaches 3
percent growth in 2009, that will be a success," analyst
Stojan Stamenkovic told IPS. "That is a major blow, as
growth was around 7.5 percent for 2008, which is likely the
figure for the region."
Bosnia-Herzegovina and Croatia saw 6 percent growth in
the first ten months of the year, Macedonia 5.2 percent and
Montenegro 7 percent. All that is now expected to slow to
less than half. "It would be a miracle if Croatia reaches 2
percent growth next year," analyst Zeljko Lovrincevic from
the Economy Institute of Zagreb told local media.
"There will be a dramatic fall of investment into tourism,
construction and the ship building industry." The three are
the big engines of the Croatian economy.
"The slowdown in economic activity will last till the end of
2010 or beginning of 2011," he added.
Fears are mounting that the high unemployment rate
could go up. Bosnia's official unemployment rate stands at
30 percent, but is more likely to be around 45 percent. In
Croatia it is 12.6 percent, and in Macedonia 34.9 percent.
Montenegro puts it at 11 percent, and Serbia 20 percent.
Little is being said about the former southern Serbian
province Kosovo, which declared independence in February.
So far, this least developed area of the Balkans has received
little foreign investment. But small private business that saw
some momentum over the past years are now recording
decline, going by figures at the business registration office
of the Ministry of Trade and Industry.
"Of the 90,000 businesses registered, around 50 percent
can be considered inactive," Mehdi Pllashniku, head of the
business registration office told local media.
According to Safet Gerxhaliu from the Kosovo Chamber of
Commerce, the high number of inactive businesses is worrying.
"This clearly illustrates that business in Kosovo is in
crisis," he told local media.
In neighbouring Albania, the situation seems to be much as
in other areas of the Balkans. Albanian Prime Minister Sali
Berisha said at a business roundtable recently that the
economy would be affected by the global downturn.
"Albania is not directly affected by the crisis, but will see
a slowdown in emigrant remittances, which account for
almost a billion euros (1.47 billion dollars) every year," Berisha
said.
More than 700,000 Albanians are working abroad, supporting
more than two million people in their country.
"For us there is little more to do than to continue our work
that improves the environment for investments, despite
what happens in the international markets," Berisha said.
Serbian President Boris Tadic told reporters that Serbian
authorities will "do whatever is necessary to maintain jobs
for the employed."
Croatian Prime Minister Ivo Sanader called for a "tightening
of belts" to survive the crisis. But he brushed off predictions
that 150,000 people might be left jobless in near future.
IPS | GLOBAL PERSPECTIVES �
14 KOMMUNIKATION GLOBAL | JANUAR 2009