The growth of real wages was significantly slowed down by the still very high inflation rate, which has consequences for the standard of living, investments and overall economic activity, according to the Center for Economic and European Studies (CEES).
“Real earnings increased by only 0.7 percent in the first eight months of this year.” Therefore, it is necessary for the competent institutions to continue with the analysis of price movements and make maximum use of all available instruments for price stabilization”, according to the CEES.
CEES estimates that real economic growth this year could be around six percent. For the next year, a more moderate dynamic of all consumption factors is expected, so the real growth rate of the gross domestic product (GDP) could be at the level of 2.4 percent.
“Although a budget surplus was achieved in the first eight months of this year, thanks to good revenue collection, the fact that it was largely achieved at the expense of the poor implementation of the capital budget is worrying. And while the capital budget was implemented at the level of 53.6 percent of the plan or 37 percent lower than in the previous year, the current non-productive consumption increased by EUR 106 million or 20 percent compared to the same period last year”, CEES specified.
As they explained, the poor realization of the capital budget, combined with inflation, influenced the reduction of the total investment activity in the country in the past period of this year.
“The net inflow of foreign direct investments has also decreased. That is why changes in the fiscal policy, especially in the structure of expenditures, are more than necessary, because they are also a factor of influence on inflation”, CEES warned.
Therefore, according to CEES, the future government should review priorities and direct funds towards the capital budget in order to encourage a new investment cycle.
In addition to the above, it is necessary to work on strengthening the management of public investments to support green and blue growth, further suppression of the gray economy and improvement of the business environment, as well as reform of state-owned enterprises.
“This would contribute to reducing the pressure on public finances, especially considering the maturing of large amounts of debt based on Eurobonds in the medium term”, the statement added.
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