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News 28 Jun 16

Serbia Ponders Brexit's Impact on Economy

Serbia’s economic stability during and after Britain's exit from the EU will depend on trends in the EU economy generally and on changes in the value of the euro, experts say.

Sasa Dragojlo
BIRN
Belgrade
Serbian dinars. Photo: Twitter.

Britain’s decision to leave the EU will not directly affect the Serbian economy since Serbia does not have much trade with the United Kingdom.

However, the much talked-about "Brexit" will affect Serbia indirectly because the health of the Serbian economy depends on the general state of the EU economy and on changes in the value of the euro, experts say.

Milan Kovacevic, a member of the Scientific Association of Economists of Serbia, told BIRN that two-thirds of Serbian export now go to the EU.

“If the process of Britain leaving the EU lasts too long, it will damage the EU. If the functioning of the euro becomes more difficult, that will also affect Serbian exports,” Kovacevic said.

Experts say there will be no good news for Serbs with debts in Swiss francs, since any financial turmoil in Europe also means an even stronger franc.

Mahmud Busatlija, an economic expert, told BIRN that the value of the Swiss franc will likely rise for some time, as investors see it as a "safe haven" from turbulence. This will affect some 20,000 Serbian citizens with loans in the currency.

“Growth in the value of franc will definitely make borrowing rates for people with debts in francs even higher,” Busatlija said.

He added that, depending on any rise in the value of the US dollar as well, Serbia's foreign debt could rise.

“We still do not know how the dollar will react [to recent events in the UK]. If it goes up, our debt will also go up,” Busatlija said.

On Monday, the Serbian dinar fell by 0.1 per cent against the euro and the official exchange rate on Monday was 123.9531 dinars to the euro, its lowest value this year.

Jorgovanka Tabakovic, Governor of the National Bank of Serbia, said on Tuesday that the outcome of the referendum on Britain leaving the EU would not affect Serbia's macro-economic stability.

According to her, Serbia is deemed a politically stable country and “political stability is the factor that most affects financial stability”.

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