By TALLINN. Dec 21 (Interfax-Ukraine) – The Bank of Estonia is forecasting growth in both prices and unemployment and a drop in consumer demand at the beginning of 2023, the bank said in an economic forecast for next year.
"We will in all likelihood see in the new year that a yet delayed reduction in purchasing power due to price growth will nonetheless begin. Consumers have already used up their savings this year, which allowed them to purchase more goods and services despite incomes not rising at the same rates. Savings will already not be the same in the new year, and that means that people’s purchasing power will fall due to the difference between prices and salaries," Rasmus Kattai, head of the Bank of Estonia Economic Policy and Forecasting Division, said.
Experts believe that the impact on the public’s purchasing power at the beginning of the year will be particularly strong, but the situation should stabilize in the second half of 2023 due to growth in the average salary.
The economy should grow 0.4% next year on the whole after contracting 0.5% this year. According to economists, next year will be a turning point, but the watershed will come only in the second half of the year, and it will be possible to reach the pre-crisis level of public prosperity only by 2025.
