Recession in 2023 and the impossibility of Bulgaria entering the Eurozone in 2024. predicted the economist Stoyan Panchev in the program “The Day Live” on NOVA NEWS.
“We should not change the euro on January 1, 2024. This rush to enter the Eurozone is like Germany’s rush to shut down its last nuclear power plants at the highest price of electricity in the last 40 years,” said Panchev.
According to him, the Eurozone is currently in a very difficult situation. “This is record inflation of the last 40 years. In Germany, such high prices have not been seen since the 1950s. The whole area is in a severe crisis”, the economist believes.
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According to him, January 1, 2024. “it is not the right date” for Bulgaria to enter the Eurozone, because “it is not appropriate to change our monetary system in a severe crisis”. He described this as “unreasonable”.
The risks are more than the pros at this stage, Panchev also believes.
“It is not the moment when some big change is happening, for us to remove a 25-year-old currency board and adopt a new monetary system,” he explained. According to him, the change will not have a big effect on the salaries of citizens. As potential problems, he singled out the currency conversion and the transition from a currency board to the euro. As an example, Panchev gave the two countries with the highest inflation at the moment in Europe – Estonia and Lithuania. “Both countries had a currency board and entered the euro. It has also been proven from an academic point of view that if you make this transition from board to euro, there is additional upward pressure on prices”, explained Panchev.
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There are two approaches that can help to deal with inflation in our country, the economist believes. “One is for the Bulgarian politicians and institutions to do something. This is possible in line with reducing the budget deficit. The problem with shrinking the budget, however, is that the state’s capital expenditures and social programs may suffer,” he explained. “In order to stop the growth of inflation, however, one must go through some economic pain”, added Panchev.
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The second approach is external and is already observed outside Bulgaria. “Major central banks have started raising interest rates. This will also have a painful effect”, added the economist. He explained that the increase in interest rates will make it difficult for companies and private individuals to repay their loans.
His forecast for next year is that there will be a recession, Panchev also said.
“What people can do is rethink their expenses, prepare well for the winter and have a conversation with their employer to index their pay,” he advises.
Watch the whole conversation in the video.
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