In the New Year, the world economy, and therefore ours, entered under the pressure of several consecutive crises: pandemic, energy and geopolitical, which were the trigger for political disturbances in the market.
In 2022, in addition to high inflation around the world, and the consequent tightening of monetary policy, the year was still marked by disorderly supply chains, a sharp drop in the stock market index, the rise in energy and food prices caused by the war in Ukraine…
As local experts assess for “Blic Business”, 2023 will be an economically equally uncertain year as the previous one.
Three factors crucial for private individuals
Dragoljub Rajić from the Business Support Network, in response to the question of what awaits the private sector in 2023, points out three factors that should be worked on.
– The overall business climate in Serbia will depend on several parameters. First and foremost is whether inflation will significantly decrease in the next year, because it caused great damage to businessmen for the simple reason that the prices of all the raw materials we import, which are needed for the economy, have risen significantly. If in the next year If inflation and the energy situation in general calms down in 2018, it would significantly benefit our economy to do business more easily and to conclude new deals in these unstable conditions.
– Business in Serbia and business costs have increased by some 20 to 22 percent, according to some projections, on an annual basis during 2022. Due to the lack of money in the budget, businessmen had to increase the prices of either utility services or the costs of some services. Parafiscal levies were increased, hence the 22 percent increase. If that trend continues in 2023, it will make business even more difficult, and thus reduce the competitiveness of our economy in exports.
– Factor number two is political stability, since the EU is the dominant market for us, where we export two thirds of products and services, Rajić enumerates.
– The third factor is loans, which are becoming more expensive, so it is important that the NBS stabilizes inflation as soon as possible and does not raise the reference interest rate too much, because this will lead to a further increase in the cost of loans, which will further affect exports.
– Businessmen look at 2023 with moderate optimism, if inflation stops. However, if these negative trends continue, many of them, 72 percent of those we gather, believe that it will be a year in which it will be necessary to stabilize the situation in business, not to enter into any risky business, but only to see how to maintain business. If the next year is stable, only in 2024 could we expect some upswing in business.
Banks in the sign of high interest rates
Professor Ismail Musabegović pointed out for “Blic Biznis” that next year the banking sector expects, first of all, a further increase in interest rates.
– All loans will become more expensive, I expect the Central Bank of Europe to continue raising interest rates. I believe that by June they will already add 2 to 2.5 percent as some 6 meetings are expected in the first half of 2023. I believe that they will increase by half a percent, but most likely in March we will know if these measures have made a difference so far, if not , then they will continue to aggressively increase the interest rate and it can amount to 4 or even 5 percent, says Musabegović.
When asked how this will affect Serbia, he points out that all loans that are indexed to Euribor will become more expensive, because Euribor will become more expensive.
– So probably people who have a loan of 50,000 euros for 20 years, for example, will feel it the most. Depending on which repayment period they are in, it will have the greatest impact on those who have recently taken out loans, less on those who have taken out loans before. A one percent increase in Euribor increases the credit somewhere between 25 and 35 euros on average. Credits may increase until June depending on whether it is adjusted to the three-month or six-month Euribor. In any case, the year 2023 will be uncertain, he pointed out.
Higher production costs
Ljuba Savić, about what kind of situation can be expected in the industry in 2023, says that companies expect to adapt to the new circumstances that will arise after January 1.
– This means that electricity and gas prices will increase specifically in Serbia, they are two important raw materials for a large number of companies, both domestic and foreign. Production costs will increase, so these companies must look for other ways to remain competitive.
– Next year will be much more difficult, unfortunately. 2022 was difficult because new circumstances arose after the pandemic and there were big shocks related to the so-called imported inflation. In Serbia, it was previously exclusively imported, supply chains in the world were broken. There was an enormous increase in the price of all those inputs, raw materials, food, inflation. We will end the year probably with an inflation rate of 15 or 16 percent. So, these are all unfavorable circumstances that befell the Serbian industry, he points out.
– The problems are increasing month by month because the war in Ukraine is escalating. More and more countries have regrouped, blocs are being created, which also affects the global operations of large companies.
– Although everyone thinks that inflation will fall, I am not an optimist. I think 2023 will pass in economic chaos. Some countries will do better, some worse. The situation in the EU and at the world level is getting complicated and it will intensify in 2023. The population will find themselves in a problem due to the growth of the Euribor, that is, reference interest rates. I do not rule out the possibility that some companies will resort to layoffs. We are included in the world economy, so all these changes will be reflected in the operations of the Serbian economy. 2023 will not be any easier for us, Blic writes.