The increase in bank interest rates will impact every sphere of society as those taking out loans, including companies, will be forced to reconsider their business models, including prices, meaning a lengthier economic crisis, Serbian Economics Professor Ljubodrag Savić told EURACTIV Serbia.
Inflation, which reached particularly high rates last year, has pushed banks to increase the reference interest and Euribor rates, further pressuring people with loans.
According to Economics Professor Ljubodrag Savić, the situation spreads like a “butterfly effect” and deepens the increasingly difficult financial situation of Serbs, and, since industry actors also take out loans, interest rate increases will be reflected in product prices.
“I have no doubt that interest rates will also rise this year. Predictions are that Euribor could go up to 3.5% and even up to 4%, plus an interest margin so that citizens can count on an interest rate of between 6% and 7%,” he explained.
“We have products that are necessary for basic living, while some we don’t have to buy. This will lead to a decrease in the demand for the latter products, a decrease in the activities of certain companies, and the survival of some will be threatened,” says Savić.
“The difference between the 2008 crisis and this one is outstanding. In that time, the whole world was united, while now it is deeply divided between Russia and the West,” Savić added.
Like many world economists, Savić is not optimistic about a quick end to the crisis.
“The world we lived in until the start of the pandemic, and especially after the Russian-Ukrainian crisis, is no longer and will never be the same,” he concluded for EURACTIV Serbia.
(Milena Antonijević | EURACTIV.rs)
Source: euractiv.com
