10.11.2023

ECONOMIST: UNEMPLOYMENT WILL INCREASE AND THIS WILL HAVE A NEGATIVE IMPACT ON CREDIT

A situation is emerging in which we will observe serious processes in the labor market. I believe that unemployment will increase, which to some extent will have a negative impact on credit as well. This is predicted in Burgas by Kuzman Iliev, economist and financial analyst, founder of the organization "Bulgaria can do it alone".

The reason for this, it became known from his words, lies in the increasingly distinct processes in the world economy, in which revenues are shrinking and expenses are increasing. In our country, this will lead to two things - a reduction in wage costs or layoffs, Iliev pointed out during the ninth National Conference of the National Real Estate Association.

"If a person gets depressed and begins to think that no one is thinking about him, no one is calling him for his birthday, let him try not paying his mortgage payment, for example. Then he will suddenly realize that someone is very interested in him . That's where we are going - to a slightly more complicated time. The situation we are observing in the United States of America is extremely unnatural and abnormal. There, the interest rate on the mortgage loan is 7.5 percent - a record historical peak for interest rates, and in Bulgaria they are below 3 per hundred. This is very characteristic of a country that is on the periphery of some circle. In our case, it is the Eurozone. The center always exploits the periphery - this can be called, if you like, currency imperialism, but I use my own term "blood donation economy," Iliev said.

When you are on the periphery, inflation is always higher, the processes always come more slowly, but they hit harder, he commented, giving an example of the interest rates that the European Central Bank raises, but this is not felt in our country .

"Strange - the transmission is not working. But all economists are aware that this transmission is not working, because we, being on the board, do not closely follow the Eurosystem yet. We have our huge deposit base, and this money can now be placed by the banks. But that will change the moment security is felt very strongly in our partners. We see the Germans right now - they've been in recession practically for several months. They can't turn things around to positive growth there, and those are our main trading partners . We export our huge part to them," said Kuzman Iliev.

He added that these processes will also affect Bulgaria - interest rates will rise against the background of decreasing disposable income.

"This will be felt by those who today have some other lease, mortgage loan, earn 5,000-6,000 BGN salary, work a lot, but at some point it will turn out that the monthly installment on the loan has increased by 150-200 BGN and the bill won't come out. This is happening in the US and it gives the impression that savings are being used and credit cards are "booming", that is, the buffers are being eaten up. I think the Bulgarians also currently have some buffers and keep their money on deposits, because there is nothing to invest them in," Iliev added.