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BANJALUKA, Sarajevo – The German manufacturing sector’s recession deepened in August and recovery is nowhere in sight, and any bad news about the German economy is also bad for the economic development of Bosnia and Herzegovina, concludes the “Markit ekonomiks” report.
That is, as the economists said in an interview with Nezavisne novine, as a result of the German events in Bosnia and Herzegovina, in some sectors of the economy, factories were closed, jobs were lost, and wage growth stagnated.
Economist Admir Čavalić, in an interview with Nezavisne novine, noted that this situation in the German economy will have the greatest impact on Bosnia and Herzegovina. Exporters that are most closely connected to the German market.
“It is important to emphasize that we have no choice but to improve the business environment and make it easier and faster for businessmen to adapt to the new environment,” Cavalic said, adding that the only thing Bosnia and Herzegovina can do is to monitor the situation because, as he said, Bosnia and Herzegovina is an economic satellite of the European Union, especially Germany, and therefore the domestic economy is directly dependent on Germany’s economic development.
“The German economy has been stagnant since the middle of last year, as evidenced by factory closures, job losses and stagnant wage growth,” Cavalic said.
As he explained, the only thing that the Bosnian economy can do now is, as Cavalic said, to work on the issue of joining the World Trade Organization.
“We should work towards improvements with CEFTA countries, that is, on the basis of the Berlin process, regional cooperation, we have a reserve market as an additional option”, Cavalic said, adding that we should look for other markets with strong economies, especially countries with which Bosnia and Herzegovina does not cooperate… “For example, the United States of America, in addition to Germany, Italy, Slovakia, but also other European countries”, Cavalic concluded.
Economist Sasha Stefanovic also believes that the German economic crisis has a very bad impact on Europe because the German economy is known as the engine of Europe.
“This is reflected in reduced public investment, lack of innovation, external demand orientation, and dogmatic debt rules,” Stevanovic said.
He added that the forecast for the German economy was not good because the root causes of the economic problems had not yet been eliminated.
“The direct loss reflected in the reduction of exports to Bosnia and Herzegovina is about 150 million km, but the loss is much greater because the German economy and its ability to pay affect the exports of other countries, which in turn rely on imports from Bosnia and Herzegovina,” Stevanovic said.
He noted that if we look back over the past 10 to 15 years, the measures and activities of the German economy should serve as experience in how not to manage an economy.
“Maybe the economic management was rational, it was based on the economic principles of the successful German economy, let’s say, before the global economic crisis, but since then times have become irrational and the management principles of the German economy have become irrational. The economy has changed,” Stefanovic noted.
As he puts it, a vivid example is that the German economy competes with the economies of the United States, China and India despite those economies’ policies of persistent government deficits.
Germany, on the other hand, has the opposite policy, which is a small deficit or a small surplus, and then we have the results that are being implemented, Stevanovic said.
“The competitiveness of the German economy is decreasing, while that of other countries is increasing. Maybe other countries are acting irrationally, but we can’t fight them, we have to adapt. The German economy is clearly not,” Stevanovic concluded.
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