The new year 2023 will be even more difficult than the previous one, because turbulence in large economies is leading the entire world to recession, according to experts. How much the crisis will be felt in small economies depends on the outcome on the global stage. The main reason for concern in Serbia is the expectation of a decline in economic strength in half of the countries of the European Union, as the most important partner.
The outbreak of covid in China, the war in Ukraine, inflation, high interest rates… Due to the “domino effect”, they could put a third of the world into recession in 2023.
“For most of the world’s economies, the year 2023 will be more difficult than the previous one, because the three major economies – the United States, the European Union and China – are slowing down at the same time. The USA is the most resilient and may have avoided recession, half of the EU countries will enter recession, and it will be increasingly difficult for China this year and next. This will be reflected globally through negative trends. For developing economies, the situation is even more serious,” International Monetary Fund director Kristalina Georgieva told CBS television.
The IMF’s expectations for the growth of the world economy in 2023 decreased with each new economic forecast, and according to the last one, with 2.7 percent, an even worse situation is predicted than the year ahead.
“It started with the slowdown due to corona and then low interest rates were used as an instrument to stimulate economic activity. However, then came the energy crisis, prices rose, we had inflation and interest rates rose. It is normal that the increase in interest rates acts as a disincentive on economic activity, it is expensive to borrow, it is expensive to invest from the point of view of companies. All this is a mix of reasons which, we can already say, introduced the world economy into ‘stagflation’. This means at the same time the coexistence of high inflation and very low economic activity, close to zero, and it is all an announcement that due to the rise in interest rates, which will probably be extended a little at the beginning of this year, a recession will occur,” said Zoran, a professor at the Belgrade Banking Academy, for N1.
Experts expect that “stagflation” will turn into a recession in the first half of the year, which will affect half of the countries of the European Union in Europe. Is this a cause for concern in Serbia?
“We expect big challenges for our economy due to the recession in some European economies to which we are directly linked. Further weakening of some European economies or countries within the European Union in that economic sense will mean many challenges for us. “Unfortunately, I also expect investors to be more careful,” said the Prime Minister of Serbia, Ana Brnabić.
Bad expectations from 2023 are already being incorporated into the economic climate, the events of the big players are reflected in the Eurozone, and from there they reach us, Grubišić points out. This is why citizens have another challenging year ahead of them.
“I do not think that inflation will continue to grow, but it will remain this year at an already relatively high level and it is expected that it will gradually decrease only in the second half of the year.” The blow to purchasing power remains. Generally speaking, it is not to be expected that wages will follow this, it is a challenge for the population. It will be necessary to overcome this, to buy time, depending on the position in which each family is, to take some loans”, says Grubišić.
As things stand, we may not fill our wallets even in 2023, but the Prime Minister announces that in three years the average salary could rise to 1,000, and the pension to 500 euros, N1 writes.
