Serbian firms are adapting to the crisis in different ways

Tourism and hospitality are the most affected business sectors in Serbia hit by the pandemic of the coronavirus, according to the 2nd iteration of the “Overcoming the crisis together” survey, that was conducted by the Chamber of Commerce and Industry of Serbia and USAID’s Cooperation for Growth Project. They have been followed by the creative industry, transport, and storage industry, while the crisis also hit the IT sector and industry. Capacities for production and services have drastically decreased, but the absolute majority of firms (85 %) have kept the same number of employees as before the crisis. One-quarter of business entities have already recovered partially (26%), while 12% of companies have already reached the same level of business performance as it was before the crisis.

The survey, conducted from April 21 to April 27 with the participation of 1.000 businesses, indicates that after seven weeks of the crisis the strongest effects that have affected business entities are working time limitations and work from home, lack of contact with clients, and illiquidity. The finding once again points to the sensitivity of the private sector to liquidity, while the biggest challenges related to liquidity are the inability to cover the underlying costs and inability to collect domestic claims from the private sector.

The survey shows that firms have conducted various measures to adapt to the crisis, so every other business entity has organized work from home for part of their employees, while 43% of respondents have also reduced working hours. Every third entity has started negotiation with creditors about delaying debt payment, while 20% of respondents have partially closed business operations. According to size, the most affected entities are entrepreneurs and micro-enterprises, while almost all respondents have expected the reduction in sales and profitability by the end of 2020.

Around one-fifth of respondents (21,2%) have changed their business model/production algorithm, so we can conclude that some of the Serbian businesses have been better prepared for the crisis. The survey also indicated that there is potential for further improvement since every third firm can adapt their business to the online.

Almost all medium and large enterprises have a website, while the number of eCommerce firms in Serbia has also been increasing, so every fifth enterprise sales products and services online. Even the most optimized eCommerce offers all types of payment methods to customers, a small percentage of firms offer more than one payment method to their clients.

In the seventh week of the crisis, assuming that the crisis ended in the last days of April, business entities estimate that, on average, they will need more time to recover than it was estimated at the very beginning. It is estimated that they will recover in a period of 3 to 6 months or from 6 to 12 months. The expected period of settling the obligations has been prolonged and it will last for 90 days or more since until the beginning of the autumn.

The substantial majority of enterprises have applied for state aid measures and according to representatives of business entities, the most useful measures are direct assistance to the MSME sector through the payment of the minimum wage, deferral of payment of taxes on wages and contributions, deferral of advance payment, and guarantee schemes for supporting the economy There is a significant number of entrepreneurs (from 10 to 14%) who need additional assistance in using state aid measures.

The survey shows that a decline in the transport, tourism, and industry significantly affect the business operations of other companies within the supply/value chains. Most firms, two-thirds of them, are affected by changes in their operations to up to 30 other firms in the supply chain backward (their B2B suppliers), and to up to 100 other firms in the supply chain upfront (their B2B customers).

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