The energy crisis will continue because this huge increase in the relative price of energy means that the strain on the economy will remain. You can’t, you can’t save them all, you can’t do it by magic, said Fiscal Council President Daniel Dayanu at the Cursdeguvernare.ro conference. “There is no magic wand to go back 3-4 years! But as a Government, you cannot issue such a message. Governments are elected to fix things and please the majority of people, everyone if possible, Dejan also said

Rising energy prices are a transfer of income between energy producers and other gains. And they lose more. Conflicts in society are growing and extremist parties are winning

Economies have faltered and the big challenge, the big challenge for economic policy, is to limit the damage, Dayanu says.

A legitimate question: if we have economic growth, why don’t citizens feel it? Well, you don’t feel it!? Because we talked about a sharp change in the relative price of energy. Few people win under such conditions. This is a revenue transfer to power producers and other winners. And others will lose. The majority loses, so the growth of the economy is not felt. Distributional conflicts in society are increasing and extremist and populist parties are winning, the head of the Fiscal Council also believes.

Dayanu believes that uncertainty is extreme, and we operate in models that central banks and the Ministry of Finance use with several extremely uncertain variables.

We have. In addition, many zombie firms – firms that have had major funding problems – will now have even greater funding problems and may go bankrupt.

This is a cost of living crisis that cannot be solved in 6 months or even 2 years

The energy crisis will continue because this huge increase in the relative price of energy means that the strain on the economy will remain. You can’t, you can’t save them all, you can’t magically do it. You don’t have a magic wand to go back 3-4 years, you don’t! You cannot come up with a message like the Govt. Governments are elected to fix things and please the majority, everyone if possible. Either this is impossible, or I don’t see how it can be done – the economist believes.

We are talking about the cost of living crisis here. “In what sense? This is not a crisis that can be solved in 6 months or even 2 years. It is a syndrome of war economies, although there are no missiles or bombs flying here, but the war can be seen through very high inflation, it can be seen through the cost of utilities , this can be seen through the risk aversion exhibited by the business environment,” says Daniel Dayanu.

The cost of energy is, let’s say, the cost of all costs. You can’t live without energy unless you go back to the cave

The cost of energy is, let’s say, the cost of all costs, according to the chairman of the Fiscal Council: “You can live without energy only if you go back to the cave and have no heat and get food from the forest. Therefore, it is very difficult and it will be very difficult in Europe, and it will not be solved this winter. We must adapt. We need to tighten our belts, but this belt cannot be tightened equally by citizens, households and companies,” he believes.

From the point of view of some macro assumptions for 2023, we will have a sharp slowdown in the economy. I see it growing by 2-3% in 2023 unless we have more serious downside shocks. Because we don’t know what will happen in Europe, and Romania’s economy pulses with what is happening in the European economy, Dejanu also said on Tuesday.

In times of war, the government must cooperate with the central bank. And the business environment should not put pressure on a government that pursues local interests

Inflation next year will decrease from 16% – the latest data of the National Bank. We will have a process of disinflation.

In times of war, the government must cooperate with the central bank. And the business environment should not put pressure on a government that pursues local interests because the economy is very tight, the population is tight, geographically we are in Europe…

In any case, I believe that the presence of the state in the economy, as seen throughout Europe and the United States, will be more accentuated for reasons related to the provision of basic needs, food, energy, security. the energy market should be much better regulated, the well-known economist believes.

Now our economy has been turned upside down not by internal problems, but by external shocks. The current situation is unprecedented since the Second World War. Many people do not understand how strong a shock the increase in energy prices was for the economy. This has not happened in several decades since the American economy suffered such a shock from a rise in the price of crude oil. You have a pandemic that is not over, you still have the effects of deglobalization, the disruption of supply chains, you have this prospect of stagflation, a very nervous financial market. Britain was punished as a second-tier developing economy. You have an increased aversion to investments. Hence the importance of European funds for us, if we have the institutional capacity to master them, sums up Dejanu