The still very high inflation rate has significantly slowed the growth of real wages and has consequences for living standards, investment, and overall economic activity. Real wages increased by only 0.7% in the first eight months of 2023. Therefore, it is necessary for the competent institutions to continue analyzing price trends and to make maximum use of all available instruments to stabilize prices. 

According to the assessment of the Center for Economic and European Studies (CEES), real economic growth in 2023 could be around 6%. A more moderate pace of all consumption factors is expected in 2024, which could result in a real GDP growth rate of approximately 2.4%.

Although a budget surplus was achieved in the first eight months of 2023, thanks to strong revenue collection, it is concerning that it was largely achieved at the expense of poor execution of the capital budget. While the capital budget was implemented at 53.6% of the plan, or 37% lower than in the previous year, current non-productive spending increased by EUR 106 million, or 20%, compared to the same period in 2022. Poor execution of the capital budget, combined with inflation, contributed to a decline in overall investment activity in the country during the 2023 period. Net inflows of foreign direct investment also decreased. Therefore, changes in fiscal policy, particularly in the structure of expenditures, are more than necessary, as they are also a factor influencing inflation.

Therefore, the future Government should reassess priorities and redirect funds toward the capital budget in order to stimulate a new investment cycle. In addition, it is necessary to strengthen public investment management to support green and blue growth, further curb the grey economy, improve the business environment, and reform state-owned enterprises. This would help reduce pressure on public finances, particularly in light of the maturity of large amounts of eurobond debt in the medium term.

CENTER FOR ECONOMIC AND EUROPEAN STUDIES