Finance Think analysis: Inflation will be higher than 7.2 percent


The Budget Review a response to the crisis, but greater consolidation of current expenditures is needed so that it does not have a pro-inflationary impact, estimates Finance Think and urges the need for funds in this budget of about 900 million euros, of which about 700 million euros current deficit to be dominated by foreign sources, in order to provide greater support to foreign exchange reserves, primarily from concessional creditors.

According to Finance Think, the revised macroeconomic projections in the supplementary budget, 3.2 percent GDP growth for 2022 and 7.2 percent growth in the cost of living (inflation), are optimistic.

The projected growth rate is at the upper limit with significant prospects to be lower, while the projected inflation rate is at the lower limit with significant prospects to be higher. In nominal terms, combining real GDP growth and price growth, which is the basis for estimating budget revenues, the projection for their growth is currently correct and is mainly due to the price increase that contributes most to the growth of VAT revenues. The supplementary budget envisages widening the budget deficit to 5.3 percent of GDP, and in conditions of further slowdown in GDP growth, it will be overcome, said Finance Think in its analysis.

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