July 6, 2022

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The five most interesting developments in the economy at the moment

The five most interesting developments in the economy at the moment

1. The government changes its fiscal policy, and austerity comes

we bring More signals Demonstrate that the government intends to review its current fiscal policy. Now less money will be spent thus helping to fight inflation.

At the Ministry of Finance, we are of course aware that an increase in public spending may delay the decline in inflation to more acceptable levels, and therefore we intend to be very careful with new spending. Our plans aim to reduce public sector spending in relation to GDP from 44.4%. reach 42.4 percent in 2025

– said Finance Minister Magdalena Rzekowska.

A 2% reduction in the expenditure measure will not mean a nominal decrease in GDP, as GDP is expected to grow year on year, but it will likely mean increases in spending less than inflation. Given that some of the state’s military spending is expected to grow exponentially, the rest will be a bit of a pull. Earlier, over the weekend, PiS was surprised by not announcing the indexing of the 500 plus program that was previously announced through media leaks. Some economists are beginning to see this as significant changes in fiscal policy.

In recent months, the government has pursued a loose fiscal policy, which has led to increased spending, which means increased demand in the economy. This was criticized by many economists, who believed that such a policy helped increase inflation. Recently, even former and current members of the Monetary Policy Board have joined in with this criticism, claiming that accommodative fiscal policy is dampening the effects of monetary tightening, so that inflation cannot begin to fall. The minister’s words suggest that the government has noticed this and intends to change it.

See also: Time for a 500-plus appraisal? Poll can explain government behavior

2. The collapse of car sales in Russia

New car sales in Russia fell 84 percent in May. Compared to May last year – Bloomberg writes. The new owners found just over 24 thousand. to me. For comparison: in Poland in May, more than 41 thousand. to meWhich means a decrease of 12.8 percent. every year. While we and all of Europe are facing recessions related to industrialization problems in the industry, Russia is going through a complete collapse on one side of demand and the other side of production. Their May sales were nearly a tenth of what they sold in their markets in the good times of 2011-2014 and a sixth of what they sold in 2015-2021.

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