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Dear colleagues, partners, sponsors, and friends,

Due to the Covid pandemic, the Programme Committee of the Serbian Economic Association has decided to postpone its traditional annual meeting on the most current economic, political and social topics in the country and the region from March to May, 2021. We would like to inform you that preparations of the XXVIII Kopaonik Business Forum are now underway and this year’s meeting will be held from May 24-27, 2021 at Hotel Metropol Palace in Belgrade. Continuing the twelve-year tradition, the Prime Minister of Serbia remains the conceptual sponsor of the Forum.

Based on the initiative and support from our long-term partners, sponsors and many participants, our intent has been to hold the forthcoming Forum in the traditional face-to-face format. Over the years, the Forum has brought in distinguished academics and business speakers on most important policy topics and shared a rich content on relevant economic, financial, business, social and political issues. Increasingly, the Forum grew to provide a unique interactive platform for an exchange of experiences and opinions, as well as a meeting point for business networking of renowned experts and eminent names from domestic and regional economic and political scene.

The organization, size and scope of this year’s event, schedule, and structure of the panels will be adjusted to the prevailing epidemiological situation with full regard of strictest health and safety measures, to ensure maximum safety of guests, participants, and organizers

The main theme of the XXVIII Kopaonik Business Forum will be:


The XXVIII KBF will provide an in-depth coverage of many relevant current topics ranging from issues of macroeconomic (fiscal and monetary) policy, to challenges posed by the fourth industrial revolution, digital economy, creative new industries, regional economic cooperation, infrastructure, investment, banking and insurance sector, energy, (public) health, education and many other topics related to the new sources of sustainable economic growth in a changed business environment of the post-Covid world.

GLOBAL CONTEXT: As the world economy struggled over the last decade to address the challenges posed by the ensuing Fourth Industrial Revolution, migration pressures, and climate change, the coronavirus pandemic quickly toppled these issues and became the mother of all concerns. It killed more than 2.4 million people and triggered an unprecedented global economic downturn. Despite the fact that immediate loss of global output and jobs may turn out to be less severe than originally projected, due to monetary easing and enormous fiscal stimulus packages, the world economy is in a desperate need of a structural overhaul. A great reset of the dominant mode of production and trade is needed to shape the global economic recovery and harness the fourth industrial revolution aligned with sustainable environment, public health and education systems, A significantly greater level of international cooperation and commitment to environmental agreements and global public goods will be required to achieve and sustain these results on a regional and global scale.  
More specifically, the Great Reset (term first time mentioned by Mr. Schwab) agenda aims to:
•    steer the market towards fairer outcomes through improved coordination of tax, regulatory, and fiscal policies, better trade arrangements, and improved conditions for a “true stakeholder economy”,
•    align investments with shared goals of equality and sustainability, and
•    harness the innovations of the Fourth Industrial Revolution to address health and social challenges and support the public good.

RECENT ECONOMIC DEVELOPMENTS: The latest assessments by the IMF and prominent international organizations done in January 2021 indicate that we may expect an economic turnaround later this year. Recent vaccine approvals and mass applications in many countries, along with existing and new fiscal and policy support have raised hopes that we may see economic recovery soon. Global GDP growth projections (based on IMF WEO January 2021 update) have been revised upwards by 0.3 percent to 5.5 percent in 2021 and 4.2 percent in 2022. On average, this will put the global 2021 GDP at pre pandemic level before the year end and yield higher incomes next year. 

The dynamics of economic recovery will vary across countries and regions. Full recovery to and above pre-crisis levels is expected in the US, China, India and most emerging market economies. The Euro area will take longer to reach the pre-crisis levels either due to slower growth (Germany) or due to record high economic contraction caused by the pandemic (Italy, France) in 2020. This is one of the main reasons for delayed and subdued recovery in emerging and developing European economies (including Serbia) which substantially depend on exports to major EU countries. Other emerging and developing economies are expected to have more dynamic growth than the global average due to increased commodity prices and sustained fiscal and monetary support.

Thus far, the main source of growth revival has been private consumption. Except in China, private investment picked up slowly in most countries indicating caution on the investors’ side in light of lingering multiple downside risks related to the success of vaccinations, indications of virus mutations, possible new lockdowns and cross-country spillovers. Given ample availability of long-term sources of funds globally, strong revival of investment activity and world trade can be expected as soon as the sense of finally overcoming the pandemic scare sets in.

It is important for all countries, irrespective of the level of development, to contain the epidemic and sustain effective policy (fiscal and monetary) support until economic recovery takes full hold and most vulnerable service and contact-intensive sectors have found a way to safely operate under new circumstances. In addition to the imperative of raising potential output, it is important to ensure participatory economic growth (both through employment and support measures) to avoid worsening income distribution and increase in poverty, and to position the economy for the post-crisis challenges through public investment and well-designed policies. These include green and smart investment with lower carbon dependence, digital economy, education, public health, and national and global public goods. But most importantly, the great economic reset that will enable a new start in the post-Covid era.  

EUROPE: The pandemic imposed a particularly severe social and economic toll on Europe. Lockdowns, social distancing, disruptions in supply chains and lower consumer and investment demand led to a deeper contraction of economic activity than in other advanced economies. In the absence of an exceptionally strong policy response the results would have been even worse.

Almost without exception, European countries used large fiscal packages to support households and firms, and preserve more than 50 million jobs. ECB authorities considerably eased monetary policy through conventional and unconventional means aimed at preventing financial sector disruptions and sustaining the flow of credit. Macro-prudential measures were also eased to cushion the adverse impact on both banks and borrowers. The EU relaxed fiscal rules to accommodate increasing deficits and enable support to households and firms. Additionally, supranational resources were mobilized to finance new anti-pandemic facilities and complement national fiscal policies.

Following an estimated GDP contraction of -7.2 percent in 2020, the outlook for Euro area is +4.2 percent GDP growth in 2021, and +3.6 percent growth in 2022. Within the Euro area economic contraction ranged from -5.4 percent (Germany) to around -9 percent (France and Italy) and even -11 percent (Spain). The recovery is also expected to be uneven and protracted. In 2021 GDP growth will range from +3.0 to +5.9 percent, and from +3.1 to +4.7 percent in 2022. Germany is expected to fully recover and exceed the pre-crisis GDP level by more than 1.2 percent by the end of 2022, followed by France with net gain of 0.6 percent. Despite dynamic recovery, Spain will still be 0.5 percent below the pre-crisis GDP level at the end of 2022, while Italy will be as much as 2.6 percent below the 2019 GDP level. 

Overall, Euro area was hit harder by the Covid crisis than other advanced economies and is expected to recover slower than the US or Japan due to slower (legal, institutional, and behavioral) adjustment to changed circumstances. The currently projected delayed and weak recovery remains very uncertain in the light of ongoing resurgence of infections across Europe and issues with orderly and efficient vaccination rollout. Even with the risk of “no-deal Brexit” recently avoided, policy makers will face a huge near-term challenge of carefully calibrating containment measures to minimize the immediate social and economic damage.

More than others, EU will be faced with the imperative of maintaining coordinated policy support until the recovery is fully entrenched. Due to strong production and trade linkages, premature scaling back of supportive policies could trigger a wave of recessions which could undo much of what has been achieved so far.  Ability to identify viable jobs and businesses that deserve continued support, including through job retention programs, will be critical in the coming period. Given the absence of inflationary pressures and considerable economic slack caused by the crisis, future fiscal policy support can safely be complemented by accommodative monetary policies and prudential flexibility to sustain the flow of credit.

The combination of job-retention programs, debt moratoria, grants, and loan guarantees can be effective in addressing corporate liquidity needs, especially in advanced European economies. At the same time, the ability of the announced policy measures to curb the increase in solvency risks appears more limited.

In short, the speed and robustness of post-Covid recovery in the EU will hinge on careful policy calibration and ability to provide support to viable companies in the longer term, as well as facilitate orderly exit of firms that are unlikely to succeed in the post-pandemic economy due to prior structural and competitive problems (including low productivity growth, environmental impact and climate change, and ability to keep pace with digital transition).

Future policies must address all these challenges, facilitate recovery, reduce medium-term scars of the crisis, and, thus, help Europe transform into a more resilient, green, and smart economy in the post-pandemic future.  This may have uneven and asymmetric impact across countries and regions within the EU, as well as in the accession countries with intense economic ties with the EU, including the Western Balkans and Serbia.

SERBIA AND WESTERN BALKANS. The need for a great global economic reset defines the framework for Serbia response to the Covid crisis which dramatically changed behavioral responses (of consumers and producers) and created a sizeable negative economic impact. The impact was distributed unevenly across sectors and firm sizes with most dramatic changes concentrated in tourism and service sectors, logistics and real estate.

In addition to forcing adjustment and change, this crisis has also created new possibilities and opportunities. To be utilized fully, these opportunities must be tailored to specific Serbian and WB context defined by the true level of economic development, still incomplete transition to a full set of market institutions, imperfect governance systems and inefficient government.

WESTERN BALKANS: The pandemic has pushed the Western Balkans into a deep recession. Based on most recent World Bank regional report from October 2020, the region was projected to contract by 4.8 percent due to weaker domestic and foreign demand, and disruptions in supply chains caused by the lockdowns and logistical difficulties at the regional and global level. Second wave of pandemic since mid-year and political uncertainty about the elections in few WB countries contributed to weaker economic recovery. Social distancing requirements and rigid travel restrictions hit particularly hard countries dependent on tourism and remittances where GDP declined between 8.4 percent (Montenegro) and as much as 12.4 percent (Albania). The level of economic contraction was significantly lower in Serbia (-1.0%), BiH (-3.2%) and N. Macedonia (-4.1%).

Throughout the WB region progress in sustaining economic growth, creating jobs and reducing poverty has been abruptly interrupted by the crisis. Unemployment rate has increased by 0.5 percentage points which translates into almost 140 thousand lost jobs. And more than 300 thousand people have been pushed below poverty line despite sizeable fiscal and monetary interventions aimed fighting the pandemic, limiting short term and permanent economic damage, and facilitating sustainable economic recovery.

Obviously, these interventions have also created major fiscal pressures. Going forward, the main challenge will be continuing this indispensable support until recovery takes firm hold, while at the same time observing narrow fiscal sustainability requirements. This will be a daunting task in the light of increased fiscal deficits (from about 4 percent of GDP in most WB countries to as much as 12 percent of GDP in Montenegro) and growing public debt (from near 60 percent in Serbia and N. Macedonia to over 80 percent in Albania and close to 100 percent in Montenegro).

Important aspect of resilient recovery for the WB region additionally includes the need to strengthen the economic and institutional fundamentals. The Covid crisis represents an opportunity to complete market institutions and implement key structural reforms (such as enabling more efficient public financial and investment management, improved tax compliance, introduction of green taxes, digital taxation and new fiscal instruments). This will enhance regional capacity to develop more productive processes and new services needed to better adapt to new economic realities of the post-pandemic world.

SERBIA: The outbreak of the Covid pandemic suddenly broke the positive fiscal and GDP growth trends Serbia established over the past five years. Based on successful fiscal consolidation all fiscal and macroeconomic indicators improved in the 2015-2019 period: huge fiscal deficit of over 6 percent of GDP has been eliminated and turned into a surplus in years 2017-2019; positive and increasing GDP growth rates have been achieved, while the share of public debt to GDP has been reduced from over 70 percent to around 50 percent; both public and private investments have increased, and the unemployment rate has been reduced from over 25 percent to single digit levels. Country's credit rating has been increased to near investment grade and loan spreads reduced from 650 to less than 100 basis points. Continuous and stable level of FDI exceeds the current account deficit which has been systematically reduced from over 15 percent to around 5 percent of GDP.

The Covid pandemic has stalled trade flows, reduced the level of economic activity at global, European and WB regional level. Pandemic related health costs have increased, as well as budget expenditures needed to preserve businesses and jobs. To meet increased health costs and provide fiscal support, Serbia issued bonds at international financial markets. It is estimated that, as a result, public debt reached around 60% GDP by end 2020, while GDP fell between 1 percent (Ministry of Finance) and 1.5 percent (IMF). Despite negative growth, this GDP performance is better than any of the comparator countries in the Western Balkan (WB) region and in Europe for that matter. This result is owed to better starting position, more resilient structure of the economy, and ample policy support (both fiscal and monetary). More specifically, the economy recorded solid growth in the last quarter of 2019 and in the first quarter of 2020 (5.6 percent), and the momentum carried over through initial period of the lockdown. More resilient structure of the economy is owed to historically established higher shares of sectors less affected by the pandemic (such as agriculture, food, drinks and consumer goods industries, as well as basic services) and insignificant shares of sectors most susceptible to Covid related restrictions (tourism, hotel and restaurant industry, air and other travel, entertainment and sports, etc.).

Fiscal and monetary policies to contain negative economic effects of the pandemic considered by Serbia have been introduced by 36 countries in Europe and most countries in the world. They included: 1) fiscal policy responses; 2) direct support from the budget; and 3) measures aimed at sustaining credit flows and liquidity of viable companies. Like most countries, Serbia, combined measures aimed at supporting the economy and preserving jobs, and launched them in three sequenced packages. The first package included all three groups of interventions, the second combined the first two, while the third included only the third measure – direct support from the budget.

All individuals and companies not receiving budget financing were eligible to receive support under the first two packages. The third package was aimed at hotels, and tourist agencies hit strongly by the pandemic.

The combined value of the three packages implemented during 2020 is significant and amounts to about 12.5 percent of GDP. Most of the funds were aimed at supporting consumers and vulnerable companies. The first package was comprehensive in coverage and large in terms of resource transfer. The second package was defined as an extension of the first package. Enterprise surveys indicate that most effective support was the payment of three minimum wages to all employees in micro, small and medium size enterprises and delayed payment of wage taxes and contributions till January 2021 (and subsequent payment in 24 monthly installments). Similarly, payment of two times of 3/5 of minimum wage was deemed the most effective measure in the second package. Both measures were aimed at sustaining employment levels and providing households with some income during the most difficult initial period of the Covid crisis.

Returning to GDP growth performance: The „lockdown“ during the second quarter of 2020 resulted in a 6.3 percent contraction of quarterly GDP. The average growth for the first half of 2020 was positively affected by the 5.2 percent GDP growth recorded in the first quarter.  Another major factor that contributed to better GDP growth performance in comparison to WB region is the economic structure. Serbian economy has significantly lower share (2.2%) of contact-intensive sectors (such as modern services, tourism, hotels, art, sports, and entertainment, etc.) which were heavily hit by the Covid and declined by 32 % in comparator countries and globally. In addition, fiscal stimulus and monetary easing helped maintain employment and wages, prevented bankruptcies, and contributed to markedly slower economic contraction.

The large fiscal cost of the policy support is best seen in the swollen 2020 budget deficit of almost 9 percent of GDP and a corresponding increase in the debt to GDP ratio back to just below 60 percent. Despite the heavy toll of fiscal policy support, it is clear that these policies must be continued until recovery takes hold and the risks of further economic disruptions fade. The same policy advice extended to the Euro area is fully applicable to Serbia with an added concern of more limited capacity to borrow in light of longer run fiscal and debt sustainability concerns. It is, therefore, of paramount importance that scarce fiscal resources be directed at assisting viable enterprises that will be the source of growth in the future. And at supporting smart investment that would promote green technologies, digital economy, key public goods (including education and health) and innovations, in line with the ensuing great reset. 

This year’s Forum will offer three plenary sessions, four special events and 25 thematic panel discussions dedicated to the current economic, political and social themes relevant for Serbia and countries in the Western Balkan region (and potentially other transition and emerging economies). This year we will also host two prominent international speakers. As usual, the Forum will feature representatives from the Government and regulatory bodies, National bank of Serbia, academia and research institutes, international financial institutions, diplomats, as well as leading businessmen and managers from commercial companies and banks.

Mastercard company remains the main partner of the Forum, which provides additional support to the organizer in achieving greater visibility and continuous improvement of the quality and reach of this important event.

Owing to its tradition and excellent reputation, the Kopaonik Business Forum has become the most important event of its kind in Serbia and the region, known among the professional and business circles as “the Serbian Davos”. At the end of the Forum, we will sublimate the most important conclusions and recommendations of the four-day work, and it will be our contribution to designing plausible and efficient policies with the aim of continuing the economic transition of Serbia in a swifter and high-quality manner.

The Forum received outstanding media coverage and resounded heavily among the public. During preparations of the Forum and the Forum itself, all information about the agenda, participants, sponsors, as well as daily review of news and most important events at the Forum will be published on the web page of the Kopaonik Business Forum: Furthermore, live broadcast of the complete course of the Forum will be ensured on the YouTube channel and, when the Forum ends, videos of all sessions and panels and a photo gallery of events will be uploaded. In the forthcoming Forum, we will also aspire to achieve the best possible cooperation with the media to incite professional and responsible reporting.
With our best intentions to respond together to the challenges ahead in the post-pandemic world and with hope that we will be able to increase the number of attendees in May,

KBF Programme Committee