German market: Serbia, Croatia more important than Russia

Russia was once one of Germany's most important trade partners, but since the invasion of Ukraine and the establishment of EU sanctions, trade has been in constant decline. In the first half of this year, imports from Russia did not reach even 670m euros, most of which are pesticides and metals. Exports mainly medicines, medical equipment and humanitarian aid that do not subject to international sanctions fell to just over 3.5 billion euros.

Thus, Russia fell to 48th on Germany's list of most important partners, according to official data. There are reports of indirect exports of German products to Russia through third countries, thus bypassing sanctions, but there is no reliable and concrete data on it.

When it comes to legitimate exports, after the decline of the Russian market, Eastern European countries have become increasingly important to the German economy. Thus, after the US, 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, exceeded by Serbia to 9th and Croatia at 11th place, the German economy's “Commission for the East” announced.

Good reports with Serbia, problem with protests

Trade with Serbia totals almost 890m euros ʹ an increase of up to 16.9% compared to last June, but GTAI experts note a significant slowdown in this trend.

Serbian President Aleksandar Vuciq announces major 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 investments fell by 77% compared to last year to 385m euros, according to the German portal for boosting the economy.

However, the most optimistic is Serbia's goal of joining the European Tax Area (SEPA) in 2026, which would enable faster, safer and cheaper payment transactions.

German experts speak of a significant increase in real wages in Serbia of 8.7% to about 930 euros net in April 2025, as well as a planned minimum wage increase to 500 euros from October 1st 2025. This is stimulating private consumption.

Inflation will be around 4.2% in 2025, the Vienna Institute for International Economic Research (wiw) estimates, and real private consumption growth is expected to be 2.5%.

Serbia remains an attractive procurement market for Germany despite setbacks in new investment projects. Although political uncertainty continues, German companies still see Serbia as a potential destination for the so-called “nershoring”. They have invested in numerous projects in recent years, but the protests have probably slowed further development.

About 900 German capital companies employ around 80,000 workers. Nine out of ten participants in the AHK Serbia business survey, from the summer of 2025, would again choose Serbia as an investment destination. And one in three plans to increase investments, according to GTAI.

Croatia's problem with price hikes 

Trade with Croatia increased by 8.2% by June of this year compared to the same period last year, but Fabian Mepre by state agency German Trade & Invest (GTAI) 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 price increase rate was 3.5%, and the harmonised index of consumer prices (HIPC) was up to 4.3%, which is 2.4 percentage points above the eurozone average. The prices of services and food products increased.

An even greater risk is rising utility prices. Strong domestic demand is meeting a narrow labour market and is promoting salary increases, a major cost factor.

In May, utility prices were 6.2% higher than a year ago. The tourist season is expected to bring further price hikes. Concerns are growing in the tourism sector about competitiveness of destinations, and the decline in the number of visitors in May suggests many visitors have reached the limit of tolerance, according to a GTAI expert.

Forced Trade Change

Goods trade with Germany in 2025 is developing positively, but slower than Croatia's overall foreign trade growth, especially when it comes to remittances from Germany. Recently, demand for German machinery and transport equipment, traditionally the most important cargo groups, has weakened in Croatia.

Silva Stipic Kobaali from the Croatian Chamber of Commerce expects a steady but slow increase in Croatian exports to Germany. It cites US trade conflict and possibly the weakest demand on the German market as a reason, according to the portal for promoting the German economy.

Croatia still has a large trade deficit with Germany it exported goods and services worth 220m euros and imported almost 485m euros. Much of the export growth is due to the Croatian pharmaceutical industry.

Croatia is not particularly affected by the <x0ndariates of Trump” because the American market is insignificant for it, but they are influencing the pharmaceutical industry, so export growth can be considered partly a change in priorities in that sector.

However, the German expert estimates that this change has already occurred and will not change significantly. / DW/ Periscopi/