2023 will be a difficult year that will test the resilience of all of us – individuals, companies, and even the state, experts believe. “I would not draw up my budget for 2023 considering the downward trend in interest rates,” explained Florian Libocor, BRD’s chief economist, at the annual conference of the Association of Financial and Banking Analysts of Romania (AAFBR). Discussions also touched on the level of inflation, as well as the exchange rate of the euro in 2023.

Florian Libokor: If we look at the dynamics of GDP, I admit that there are certain things that need to be clarified – latest corrections (INS)

As for 2022, I wouldn’t turn my back on it because I haven’t finished it yet. I would try to build a discussion on 2 levels: firstly, what surprises or scares us and what we should do to overcome these fears. I am personally afraid of the excessively high external deficit together with the budget deficit. But there I saw that there are big enough plans for the coming years to be reduced consistently.

As far as inflation is concerned, we are in better shape than our Hungarian neighbors. On the other hand, it is said that the ceiling has been reached and from now on we should expect a return. I believe that it is still a little early to talk about such manifestations. I believe that (inflation – ed.) will remain here, at this level.

But if we look at the dynamics of GDP, I admit that there are certain things that need to be clarified, and I mean the latest adjustments (INS-n.ed.).

I have no reason to expect a profit from lower interest rates. From this, building a budget or a business plan for the next year, at least this is what I think, should not be pushed away from, 2023 will be the year of testing our ability to endure and move forward. Some will go further. Others will not survive and, unfortunately, will be eliminated from the game.

Inflation may begin a downward trend if energy price restrictions are maintained. I am not a fan of limited time. It mechanically interferes with what is called the free market mechanism. The market in which you intervene with such instruments is no longer free.

GDP is not an indicator of development. It shows you economic growth. From here to development – we still have a lot to tell… Yes, GDP is the most convenient and comfortable, because it helps to compare countries with each other. GDP growth to measure the efficiency of the economy is growing?

But look at the example of Romania. We had growth, but we weren’t really growing. We just have to look at the connection of infrastructure, the connection of historical provinces, the state of the road infrastructure, the state of the railway infrastructure. Corridor 4 still does not connect Constanta to the western border. Look at the state of the airports: until recently you flew from Bucharest to Baia Mare on ATR. Therefore, for the development of the economy, it is not relevant to increase the GDP by 5% or 7%.

Look at local differences in living standards. In Moldova, we didn’t have investments, we didn’t have infrastructure, but we have higher unemployment, more migration, lower salaries. In Transylvania, we had investments, we had infrastructure, salaries are higher, migration is lower, negative unemployment in certain areas. And if we come to the South, we see that there are 2-3 polarizing cities. Otherwise, everything is quite difficult.

Ciprian Dascălu, BCR: Inflation could reach 8.7% at the end of next year

If we look at the expectations starting in 2022, the expectations that did not include the war in Ukraine, the consensus was below 4%. We will probably end this year with a growth of 4-5.5% – it depends on how the data will be viewed (in INS-n.red). As we forecast based on available data, and when quarterly GDP is revised from plus 5.3% to plus 1.5%, it is clear that we are in a “garbage in, garbage out” situation (distorted data entered into the system, produce distorted results – n.ed.).

We said our forecast: 2.1 economic growth per year. To mention some prerequisites. I believe that the main hypothesis is growth in the Eurozone – 0.1% as a working hypothesis. To give a similar elasticity, if we go from this -0.1% to -1/1%, so an adjustment of one percentage point to one side of growth in the euro area affects Romania’s GDP growth forecast by about 0.7 – 0, 8%. This is the elasticity of our models. Inflation at the end of the year is 8.7%. Again, the hypothesis is that measures will remain, and measures to support energy costs have already been approved and extended until 2025. Another hypothesis is the oil price. If you look at the oil futures curve, prices are expected to fall at the end of next year. And from that comes the first-round disinflationary effect, somewhere around a 10% drop in oil would mean a first-round effect of about 0.2 percentage points of inflation. And the effect of the second round reaches about 0.4%,” Ciprian Dascalu said on Friday at the annual conference of the Association of Financial and Banking Analysts of Romania (AAFBR), an event organized with the support of PwC Romania and BRD. – GSG.

Regarding interest rates, he said that BNR completed the cycle of strengthening the key rate to 6.75% in November. Asked how much he sees the key interest next year, Daskalou believes he sees it unchanged through 2023.

• Read also: What awaits us in 2023: crisis or recession? Central banks are hitting the brakes and governments are hitting the accelerator

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See below the debate organized by HotNews in BNR: Key points, based on HotNews, on the same topics