The Economies of the New States

Slovenia, Croatia and Macedonia, just like the FRY, suffered vast damages over the break-up of former Yugoslavia (there's no sense including Bosnia in the analysis since the war is still underway there). The level of sales and purchases between those republics was much higher than imports, and the breakdown of communications had a serious upsetting effect on economic trends. The three newly created states continued trading among themselves which helps lower the overall damage, especially in the case of Serbia and Montenegro.

Don't forget that the war and international community did the least damage to Slovenia. All that resulted in a deepening gap in regard to the social product which existed in the former state. Slovenia recorded the lowest drop at first and then a growth (1993 +1.3%, 1994 over 5%) and it is now estimated to have a per capita income of 6-8,000 USD. Croatia recorded a drop (especially in 1991 -29%) which contributed to the overall effect over the past four years: the greatest drop among the former Yugoslav republics, not including the FRY which recorded an even greater drop. A growth of 0.8% last year was not enough to dampen earlier shocks. The social product in Macedonia has been dropping steadily since 1989, but more slowly than in Serbia and now the two republics have per capita incomes which are about equal (earlier Serbia's was always higher).

Croatia's per capita income is about 3,000 USD, Serbia's and Macedonia's around 1,000 and if you include the gray economy then Slovenia's could stand at 10,000 (including 20% from the gray economy) and 1,250 in Macedonia (25% from the gray economy). FR Yugoslavia's would stand at 1,500.

Industrial production recorded similar trends. In 1994, industrial production in Slovenia grew by 6.4% and dropped in Macedonia (10.5%) and Croatia (2.7%). Current figures (early 1995) show that Slovenia had an average growth of eight index points out of season while Macedonia and Croatia recorded drops.

94/93 in percents Macedonia Croatia Slovenia

GDP 4.4. 0.8

Industrial production -10.5 -2.7 6.4

Unemployment (XII 94/XII 93) 6.3 18.0 14.1

Retail prices 121.8 -2.3 18.3

Real salaries 10.2 9.0

Money mass M1 239.7 190.4 42.1

Trade balance -260 mln/$ -968 mln/$ -441 mln/$

Foreign currency reserves (December 94) - 2.3 bil/$ 2.8bil/$

All three former Yugoslav republics recorded negative foreign trade balances. Slovenia has a foreign trade deficit of over 400 million USD but Slovenia's overall trade is large enough to make that amount easy to sustain. Imports and exports stand at a level of around seven billion USD and overall trade at 14 billion. Slovenia has a positive balance of payments in regard to consumer goods and has recorded an export jump of 18.4% and a 2.4% drop in services imports. That and its high foreign currency reserves creates problems for exporters because of pressure on the national currency; the Tolar. Finally, exports account for 60.4% of Slovenia's social product.

Croatia's trade deficit in 1994 stood at 968 million USD and just 62% of imports were covered with exports.

Macedonia's ratios are better but its foreign trade is much smaller than Croatia's: imports stand at just under a billion USD and exports at 1.2 billion.

Inflation was characteristic for former Yugoslavia and all the new states have had inflation problems. In that regard, 1994 is not typical since Slovenia, Croatia and Macedonia recorded single digit monthly inflation rates. In comparison, FR Yugoslavia's inflation is the last to calm down; from February to December retail prices grew by 0% but considering the 300 million percent inflation in January and 2,243% inflation in February 1994, annual figures do not reflect that.

Macedonia first recorded single digit inflation in February 1994. Before that it had high inflation rates on several occasions but it was mainly double digit; slightly higher in 1992 than in 1993. Croatia recorded single digit inflation in November 1993 while Slovenia's prices have been stable for over three years.

Current trends conform to 1994; prices in Slovenia are low in early 1995 and grew at an average of 0.8% in the first three months of the year. Similar trends were recorded in Macedonia; 4.1% in the first four months.