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The economic crisis has been reaching global proportions for several years - Serbia Business

The economic crisis has been reaching global proportions for several years

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Does inflation eat money, both dinars and euros? Whether to keep cash, or invest. Straw hat, or risk…

These are the dilemmas that plague the citizens of Serbia, especially those who have a “steak” and don’t know what to do next. The economic crisis has been reaching global proportions for several years. Estimates are that the world is facing difficult times , and arguments are that we are in an era of high inflation and the greatest energy uncertainty ever, which will undoubtedly affect both citizens and the economy.

Economics expert and professor at the Faculty of Economics in Belgrade, Ljubodrag Savić, reflected on the current crisis and compared the situation in Germany and Serbia, especially emphasizing that the current economic crisis has only just begun, that it will continue and that there is a danger of its escalation.

– Someone may blame me, but we behave better than some countries that are much more developed than us. We are a relatively underdeveloped country that has gone through all kinds of things in the last 30 to 40 years and we are used to suffering, saving, not having. Compared to us, one Germany lived in good order for those four decades. It was known who was doing what, the standard of people was very high, globalization gave very good results (high salaries, high standard, vacations, winter holidays, air transportation). Now all that has changed. It is not more dramatic than here, but they are used to living in an organized country where everything works, said Dr. Savić and added:

– They cannot understand what is happening to them. That there is no gas, that they have to save, that they don’t bathe every day, that there is no milk, bread, that prices jump five, ten or 15 percent every day. It kills them to know that this is not the end. This is a crisis that has begun and has not yet ‘bottomed out’. This crisis will continue. The worst thing is that there can be a wider escalation, to a war that will include a larger number of countries.

The professor also explained what is happening with the real estate market and what Serbs traditionally invest money in. He also pointed out that it is no longer “safe” to buy apartments…

“Apartments are not only bought by Serbs, but also by people from the surrounding area, and currently we also have Russians and Ukrainians. With Serbs, we traditionally have two alternatives – either to buy gold or to buy an apartment. You are not guaranteed apartments, because the price of apartments is now too high, and when if prices are brought back to normal – they will fall seriously. This will happen when the economic crisis passes, it may last another year or two. There will be less demand and fewer people will buy. In the economy, nothing can just grow, it has to starts to fall. The rich are those who understand when to buy, when to stop, and when to sell. That is the most difficult question. People bought apartments in Belgrade on the water when the square meter was 2,000 euros, and now that price is 6,000 or 7,000 euros. There is a big difference in price, and now renting is also extremely profitable”, emphasized Savić.

Professor Savić said that whoever has money can spend it, especially when it comes to luxury goods, so he advised women not to buy one thing.

– Alcohol, gasoline and cigarettes have always been treated as luxury goods. The highest taxes have always been on those categories of products, and that is logical. My advice is that whoever has money – should save “white money for rainy days”. This is not the time for investments, because no one can guarantee that you will have a job in two years. In the long term, the Swiss franc is the most stable. Women – don’t buy earrings or a gold chain, because when you go to the jewelry store, they will cut the price in half. Monetary gold in bullion is valuable, changes in price but does not perish. Real estate or land is also a good choice”, advises a professor at the Faculty of Economics in Belgrade.

“Inflation is eroding Germany”

Inflation is increasingly eroding the purchasing power of German citizens, now even those from the middle class. This can be seen in the increasingly empty consumer basket and in the selection of products that people put in it, according to research published on Tuesday. In a study by the German Association of Savings Banks (DSGV), 57 percent of respondents said they had reduced their spending in the previous 12 months. A year earlier, 42 percent of them had to do this.

The fear of inflation, which rose to 10 percent in Germany in September for the first time in seventy years, has now taken root. About 90 percent of respondents said they were worried about inflation, said DSVG president Helmut Schleweis (Schleweis).

The population is reluctant to spend money: they are less willing to buy than at any time in the last 16 years, and almost half, 46 percent, intend to further reduce their already limited expenditures. A year earlier, 26 percent of respondents were preparing for it.

What is inflation?

Theoretically speaking, inflation represents an increase in the general level of prices. The term inflation means swelling or inflating. We can divide it into 3 categories: moderate inflation, galloping inflation, hyperinflation.

What is a recession?

– It is a crisis that is about to turn into a crisis of huge proportions if it lasts. The world has been struggling with a crisis for more than 2 years, it started with the corona virus pandemic and continued with the war in Ukraine. When we look globally, the world is currently in the second half of the crisis, which has no end in sight anytime soon, Savić tells us.

Speaking about the current situation, our interlocutor is not optimistic.

– The current situation in the world is bad, due to the fact that prices are skyrocketing, there are food shortages everywhere, and the end is not in sight – Savić said recently and added that Serbia is not an isolated island like other countries and that everyone shares the consequences of the crisis, Kurir writes.