Serbia and Croatia are becoming more important partners for the German economy than Russia. Trade with Russia is falling, while trade with these countries is growing.
Russia was once one of Germany’s most important trading partners, but since the invasion of Ukraine and the imposition of EU sanctions, trade has been in steady decline. In the first half of this year, imports from Russia amounted to less than 670 million euros – most of which are pesticides and metals. Exports – mainly medicines, medical equipment and humanitarian aid that are not subject to international sanctions – fell to just over 3.5 billion euros. Russia has thus fallen to 48th place on the list of Germany’s most important partners, according to official data.
There are reports of indirect exports of German products to Russia via third countries, thus circumventing sanctions, but there is no reliable and concrete data on this.
When it comes to legal exports, following the collapse of the Russian market, Eastern European countries have become increasingly important for the German economy. Thus, after the USA, China, the Netherlands and France – Poland has become the fifth most important partner with a total exchange of over 90 billion euros. Among Eastern European countries, Russia is now only in 12th place, surpassed by Serbia in 9th place and Croatia in 11th place, announced the “Commission for the East” of the German economy.
GOOD RELATIONS WITH SERBIA AND THE PROBLEM WITH PROTESTS
Trade with Serbia amounts to almost 890 million euros – an increase of up to 16.9% compared to last June, but GTAI experts note a significant slowdown in this trend. Serbian President Aleksandar Vučić announces large investments in the economy, but given the protests, German partners are not sure how to assess the country’s political stability. From January to April 2025, foreign direct investment fell by 77% compared to the previous year, to 385 million euros, according to the German portal for the promotion of the economy.
Most optimistic, however, is Serbia’s goal to join the Single European Payments Area (SEPA) in 2026, which would enable faster, safer, and cheaper payment transactions.
German experts are talking about a significant increase in real wages in Serbia of 8.7%, to around 930 euros net in April 2025, as well as a planned increase in the minimum wage to 500 euros from October 1, 2025. This is stimulating private consumption. Inflation will be around 4.2% in 2025, estimates the Vienna Institute for International Economic Research (wiiw), and real growth in private consumption is expected to be 2.5%. Serbia remains an attractive procurement market for Germany – despite the backlog in new investment projects. Although political uncertainty persists, German companies still see Serbia as a potential destination for so-called “nearshoring”. They have invested in numerous projects in recent years, but the protests have probably slowed down further development.
Around 900 companies with German capital employ around 80,000 workers. Nine out of ten participants in the AHK Serbia business survey would choose Serbia again as an investment destination by the summer of 2025. While one in three plans to increase investments, according to GTAI.
CROATIA’S PROBLEM WITH PRICE INCREASE
Trade with Croatia grew by 8.2% in the year-to-date period to June, compared with the same period last year, but Fabian Mepret from the state-owned Germany Trade & Invest (GTAI) agency is not convinced that this positive trend will continue. A serious economic risk for the Croatian economy, which is heavily based on consumption, remains inflation, which remains high. In May 2025, the annual rate of price growth was 3.5%, and the Harmonized Index of Consumer Prices (HIPC) was up to 4.3%, which is 2.4 percentage points above the eurozone average. Prices of services and food products rose the most.
An even bigger risk is rising service prices. Strong domestic demand is filling a tight labor market and driving up wages, a key cost driver. In May, service prices were 6.2% higher than a year earlier. The tourist season is expected to bring further price increases. Concerns are growing in the tourism sector about the competitiveness of destinations, and the drop in visitor numbers in May suggests that many visitors have reached their limit of tolerance, according to a GTAI expert.
FORCED CHANGE IN TRADE
Trade in goods with Germany in 2025 is developing positively, but slower than the overall growth of Croatia’s foreign trade, especially when it comes to shipments from Germany. Recently, demand for German machinery and transport equipment, traditionally the most important groups of goods, has weakened in Croatia. Silva Stipić Kobali from the Croatian Chamber of Commerce expects a steady but slow growth of Croatian exports to Germany. She cites the US trade conflict and possibly weaker demand on the German market as reasons, according to the portal for the promotion of the German economy.
Croatia still has a large trade deficit with Germany – it exported goods and services worth 220 million euros and imported almost 485 million. A large part of the export growth is due to the Croatian pharmaceutical industry. Croatia has not been particularly affected by the “Trump tariffs” because the American market is negligible for it, but they are affecting the pharmaceutical industry, so the increase in exports can be partly considered a change in priorities in that sector. However, the German expert estimates that this change has already happened and will not change significantly. (DW)