Real wages are in the red. At this moment, the consumer wonders: what should I prioritize? I’m going to prioritize food, drinks, what I put in the fridge, service, utilities. What will I sacrifice? “Furniture and electrical appliances, durable goods,” said Bohdan Nikisha, who heads the risk department at Coface.

Food prices continued to risePhoto: Yamix | Dreamstime.com

“The durable goods sectors are likely to suffer in Q3 and Q4 as well, because in this rotation of consumer priorities, it’s only natural that with negative real wages, the consumer is saying, ‘Hey, I’m going to prioritize that , which really matters.” my family’s economy,” he said.

Private consumption remains positive. How is that possible?

“I have an inflation basket, I have inflation of 15.3%. How is it possible to still have this positive pull in the field of consumption?” – says Nichishoyu.

  • Well, private consumption is like a tango, a combination of feeling and behavior. At the moment, the explanation is unemployment. Unemployment is very low.
  • In this tango, who leads? Behavior!

“Okay, I have a feeling of fear: what will happen to the company I work for, the salary I receive. As long as I am employed, my salary comes at the end of the month, behavior, this behavioral inertia is stronger than the feeling of fear. How long?”, he notes.

The answer: By the time unemployment begins to feel this hemorrhaging, than it reaches the bones of the private sector, and in this tango, the sense of fear begins to prevail over consumer behavior.

What a shock is shaping the European space: fertilizers and metallurgy were affected

“Energy shock is the cruelest, most brutal factor shaping the European space and our myoritic space,” he says.

  • Fertilizer production: In the case of almost 2/3 of fertilizer production, production capacity in Europe is suspended.

“Why? In the case of fertilizers, gas is 70% of the cost. It doesn’t make economic sense to produce fertilizers if you have more than €200/MW,” explained a Coface representative.

  • Metallurgy: almost half of the capacities are either closed or will be closed by the end of the IV quarter. It’s harsh. It has a decisive influence on the chemical and metallurgical industry of the European space.
  • In Romania, we are suffering together with our partners in Europe.

It is necessary to monitor the level of unemployment in Romania in the next 2-3 quarters

“Private consumption will also depend on higher utility costs and lower real wages. Unemployment should be monitored over the next 2-3 quarters to see if it will reflect the vulnerability of the private sector. When unemployment begins to reflect this vulnerability, especially in the industrial zone where we have the largest employers, private consumption will also suffer as a result,” Nichishoy explained.

  • Not only in Romania, if you look, everywhere on the old continent, abroad, unemployment is very low.

“Looking separately at this area of ​​the energy shock, at how the industry may or may not be able to survive this shock, in the industry of the largest employers, the impact should be an increase in unemployment over the next 2-3 quarters,” he also stated.

Photo source: DreamTime.com