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There will be a global economic slowdown, not crisis

Fabris

European and world economy slowdown, announced in 2020, won’t provoke the crisis we had ten years ago. It could only lead to recession and economic attacks on individual states, said Mr Nikola Fabris, Vice-Governor of the Central Bank of Montenegro, commenting on the new economic crisis announcements.

International financial institutions and economists, Mr Nouriel Roubini, among others, forecast that in 2020 the world will be hit by a new, stronger economic crisis. There are also those who think that 2008 won’t repeat but that there will definitely be a slowdown.

Mr Fabris thinks that serious crisis might occur in one case only.

“In my opinion, serious crisis might arise in case of great political and economic tension among great powers”, says the vice-governor.

Consequences of current negative trends shouldn’t be underestimated at all.

“Causes of the unpredictable political decision lie in relations between great political and economic forces. The slowdown of the Eurozone and the greatest slowdown of German economy since 2009 are disturbingly worrying. On the other hand, if America and China reached a trade agreement, economic situation could stabilize”, explains Mr Fabris.

Unfortunately, economic theory and politics still don’t know any model that could accurately forecast the crisis.

“What we know for sure is that there were crises in the past and that there will be crises in the future. Therefore, all the announcements of the kind are in the domain of expert opinion of individuals and they can be more or less reliable”, points out Mr Fabris.

If we observe trends of the key macro-economic indicators at global level, as well as forecasts produced by prominent institutions, we’ll notice they all announce the slowdown of the economic growth.

In case of crisis, fiscal and financial stability need to be strengthened.

“As small and open economy, Montenegro is vulnerable to external shocks and risks. Montenegro’s response to economic uncertainties and risks is strengthening fiscal and financial stability. Such measures are already being implemented in Montenegro”, says Mr Fabris.

In order to maintain fiscal stability, it is necessary to continue with the implementation of fiscal consolidation measures that will lead to budget deficit reduction.

Central Bank of Montenegro is taking all the necessary measures to secure resistance of banking system.

However, we must enhance the resistance of the real sector, warns Mr Fabris.

“The factor we should work on in the forthcoming period is increasing competitiveness and productivity of the economy”, thinks Mr Fabris.

Last week, representatives of the Ministry of Finance said that they had taken into consideration projections and trends in the international market while drawing up state budget for the next year.

 

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