Date: 22/05/2020

AmCham survey finds 60% of firms are facing difficulties, but vast majority plan no layoffs

The second survey of how businesses feel the impact of Covid-19, conducted by the American Chamber of Commerce Serbia (AmCham), has found no layoffs are planned even though nearly two-thirds (60%) of all firms polled are facing difficulties. Recovery likely to be U-shaped for 55% of companies and W-shaped for 22%

AmCham’s member companies expect profits to decline by 25% and investment to fall by 30%, but most (63%) do not expect to see any liquidity issues. For as many as 68% of all respondents, the main reason for the downturn in activity is the reduced demand for products and services, which is especially apparent in the tourism and hospitality, transport, and real estate sectors. The majority of firms (71%) expect to retain current staff numbers, with similar numbers planning new hiring (14%) and expecting to shed jobs (15%). The magnitude of the impact is best illustrated by a comparison with the findings of AmCham’s Seventh Lap Time survey of 2019, when 78% of all respondents reported planning to expand operations and 61% expected to take on more staff.

More than one-half of those polled (55%) believe the economy will recover gradually, following a U-shaped curve, whilst concerns over a possible second wave of infections have led 22% to forecast a W-shaped recovery. Provided that Covid-19 is brought under control at once, more than two-thirds of all respondents believe it would not take more than six months to return to pre-outbreak performance.

Zoran Petrović, President of AmCham’s Board of Directors, thanked the Serbian Government for understanding the needs of businesses and being open to suggestions, adding that the survey was one of the best ways to help design and monitor business relief measures. Mr Petrović drew attention to firms’ increased optimism in spite of their falling profits: in AmCham’s first Covid-19 poll, conducted in March, 42% of all members reported expecting the pandemic to cause additional negative effects, whereas this latest survey puts the figure at 25%.

‘We would like to thank the Government for directly incorporating the suggestions of businesses and AmCham in these relief measures. The Government has given the economy a shot in the arm, but sectoral aid packages should also be considered until there is a return to pre-crisis levels, especially in the hardest-hit sectors such as hotels and transport. In the upcoming period, there must remain a strong focus on reducing all costs of doing business, especially administrative ones; if there is anything we have learnt from the past, it is surely that we are able to increase the extent of digitalisation of all government services and processes and so cut costs. This approach is the key to faster recovery and constitutes a sound foundation on which to grow and improve services and products in the private sector’, Mr Petrović said.

For detailed findings of the survey please click here.

One-half of all AmCham members are neither using the Government’s support measures nor planning to do so, in contrast to small and medium-sized firms. Businesses see payroll tax and contribution deferrals as the most useful policy (as reported by 41% of those polled), followed by direct assistance to small and medium-sized businesses (40%) and corporate income tax deferrals (23%).

Second round of measures needed for hardest-hit sectors such as hospitality industry, transport, and real estate

AmCham notes that a second round of measures is needed that would be tailored to the needs of the hardest-hit sectors, in particular tourism (especially the hotel industry) and transport; the government should also consider introducing policies to help the construction industry and real estate sector. The most severely affected industries, such as hotels, have seen their profits decline by over 90% relative to last year; recovery to pre-crisis levels is not expected before 2023.

Methodology of the 2020 Covid-19 business impact survey

This is the second time that AmCham has conducted a survey of the impact of Covid-19 on businesses since the start of the coronavirus outbreak. The poll aims at providing a structured presentation of the current and expected effects of the crisis on firms, as well as assessing the measures that ought to be taken to minimise the adverse effects on human health and the Serbian economy.

The perception-based survey was performed on a sample comprising AmCham member companies and was conducted from 4 to 13 May 2020 using a combined quantitative and qualitative approach. A total of 101 AmCham members across 15 sectors took part in the quantitative survey, whilst qualitative research consisted of in-depth interviews with 40 companies that commented on the quantitative findings, listed the key challenges, and made recommendations for overcoming them. Nearly all respondents in the qualitative sample were company CEOs.