September 24, 2022

In the most recent Eurobarometer survey, nearly half (46%) of Bulgarian respondents voiced their disapproval of the EU’s monetary union, which uses the euro as its single currency. Even if the “In favor” group has grown by three percentage points to 40% in the past six months, they still outnumber those who have adopted the euro.

14% of respondents “don’t know” or “refuse to answer” when asked whether they support the euro, which is the target date that the authorities have set for Bulgaria to join the Eurozone. Even those who are not required to adopt it or do not have any plans to do so, no other country in the EU has such a high percentage of people without an opinion.

As a result, Bulgaria, a nation in the “euro waiting room,” ranks third in terms of the percentage of people who oppose giving up their home currency.

The countries with the highest levels of disapproval include Sweden (72%), Denmark (69%) and the Czech Republic (59%). At the same time, Denmark was granted a waiver from the EU Treaty’s requirement that they eventually convert their kroner to euros. Bulgaria, then, has the third-worst attitude toward the euro.

The fact that respondents’ opinions of the state of the national economy have remained mostly unchanged for half a year is one reason for the results from Bulgaria. Only 10% of respondents say the situation is favorable, 84% (down from a pitiful 1 percentage point) say it is bad, and 6% (up 1 percentage point) are unsure.

Bulgarians are less gloomy than Europeans about their own circumstances and state during the coming year. In both assessments, 28% of respondents (for Bulgaria and on average for the EU) said that the situation will remain the same, while 44% (plus 8 percentage points) of Bulgarians and 53% (plus 22%) of Europeans, respectively, predicted a worsening of the situation.

Source: Noivinite.com
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September 24, 2022

According to S&P Global’s flash survey findings, France’s private sector growth unexpectedly increased in September due to the services industry.

After reaching a 17-month low of 50.4 in August, the composite production index increased to 51.2 in September. Forecasts called for the reading to drop to 49.8. A score of greater than 50.0 denotes expansion.

The growth in September was solely driven by the service sector. The manufacturing industry’s tendency stood in sharp contrast to this.

From 51.2 the previous month, the flash services Purchasing Managers’ Index increased to 53.0. The predicted result was 50.5.

The manufacturing PMI, on the other hand, dropped from 50.6 a month earlier to a 28-month low of 47.8 in September. The score was expected to decline to 49.8 by economists.

According to Joe Hayes, a senior economist at S&P Global Market Intelligence, “given the significant degree of weakness we’re seeing in the manufacturing sector, it’s possible that we’ll see some of this flow over into services, so enhancing the danger of a recession in France.”

Source: RTTNews
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September 24, 2022

• The decline in the barometer is evident in both industry and business services. By contrast, confidence is recovering in the building industry and, more noticeably, in the trade sector.

In the manufacturing industry, all components of the indicator have got worse, with the exception of demand forecasts. Appraisal of order books, in particular, has dropped significantly. A growing number of entrepreneurs have also taken a less positive view of their stock levels, while forecasts for employment have been revised downwards.

Confidence has continued to dissipate in business-related services. While the overall assessment of current business activity has deteriorated sharply, the outlook for the next three months has improved slightly. Expectations regarding general market demand have remained fairly stable. Meanwhile, the business climate in the building industry has improved, mainly because of a more positive appraisal of order books.

It is in the trade sector where the increase in morale among company managers has been the most visible, coming on the back of three consecutive declines. This renewed optimism stems from better forecasts for demand and, to a lesser extent, for employment too. However, retailers are expecting to place fewer orders with their suppliers. The fall in the overall smoothed synthetic curve, which reflects the underlying cyclical trend, has gained a bit of momentum.

Source: National Bank of Belgium (NBB) Monthly update
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September 23, 2022

In July 2022 export prices in Czechia increased month-on-month by 1.1% and year-on-year by 14.2%. Import prices increased month-on-month by 2.7% and year-on-year by 21.3%. The terms of trade reached month-on-month the value 98.4%, year-on year 94.1%.

Export prices
In month-on-month comparison, export prices increased by 1.1% (after exchange rate adjustment by 1.3%). The growth in the monthly export price index was essentially affected by an increase in prices of ‘mineral fuels, lubricants and related materials’, especially electricity and gas, by 8.9%. Prices in ‘chemicals and related products’, and in ‘machinery and transport equipment’ increased by 1.6% and 0.8%, respectively. Prices fell in ‘crude materials, inedible, except fuels’, especially metal scrap and oil seeds, and in ‘food and live animals’, especially cereals, by 8.4% and 1.5%, respectively.

In Year-on-year comparison, export prices increased by 14.2% (by 17.1% after adjustment). The growth in the export price index was essentially affected by an increase in prices of ‘mineral fuels, lubricants and related materials’, particularly electricity, petroleum products, gas and coal, by 160.6%. Prices increased in all of monitored SITC 1 groups. The significant growth was recorded in ‘food and live animals’, especially cereals, in ‘chemicals and related products’ and in ‘manufactured goods classified chiefly by material’, especially metal products, iron and steel, by 25.3%, 19.9% and 19.6%, respectively.

Import prices
In month-on-month comparison, import prices increased by 2.7% (after exchange rate adjustment by 2.6%). The greatest effect on an overall rise in the monthly import price index was brought mainly by increase in ‘mineral fuels, lubricants and related materials’, especially gas and electricity, by 16.3%. Prices in ‘miscellaneous manufactured articles’ and in ‘food and live animals’ increased by 1.7%, both. Prices in ‘crude materials, inedible, except fuels’, especially raw rubber, increased by 0.9%. Prices fell only in ‘manufactured goods classified chiefly by material’, especially non-ferrous metals, iron and steel, by 1.5%.

In year-on-year comparison, import prices increased by 21.3% (after adjustment by 22.8%). The growth in prices of ‘mineral fuels, lubricants and related materials’, i.e. gas, petroleum, petroleum products, electricity and coal, by 145.9%, had the strongest effect on the increase of the annual import price index. Prices grew in all of monitored groups. Significant increase was recorded in ‘manufactured goods classified chiefly by material’, especially iron, steel, non-ferrous-metals and paper, in ‘food and live animals’, and in ‘chemicals and related products’ especially plastics, by 15.9%, 15.8% and 14.6%, respectively.

 “In July 2022 export prices increased year-on-year by 14.2% and import prices by 21.3%. The month-on-month and year-on-year growth of export prices was significantly affected by increasing prices of  electricity, import prices were affected by increasing prices of gas”, Vladimír Klimeš, Head of the Industrial and International Trade Prices Statistics Unit of the Czech Statistical Office, noted.

The terms of trade
In month-on-month comparison, the terms of trade reached the value of 98.4% (99.4% in June). The lowest value of the terms of trade was reached in ‘crude materials, inedible, except fuels’ (90.8%). The highest value of the terms of trade was reached in ‘beverages and tobacco’ (102.5%).

In year-on-year comparison, the terms of trade reached value of 94.1% (96.3% in June), which was the lowest value since May 2000 (93.1%). The lowest value of the terms of trade was reached in ‘beverages and tobacco’ (92.1%). The highest value was reached in ‘food and live animals’ (108.2%).

Source: Czech Statistical Office
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September 23, 2022

The Monetary Policy Committee (MPC) in Türkiye has decided to reduce the policy rate (one-week repo auction rate) from 13 percent to 12 percent.

The weakening effects of geopolitical risks on global economic activity continue to increase. Global growth forecasts for the upcoming period are being revised downwards and recession is increasingly assessed as an inevitable risk factor. While the negative consequences of supply constraints in some sectors, particularly basic food, have been alleviated by the strategic solutions facilitated by Türkiye, the upward trend in producer and consumer prices continues on an international scale. The effects of high global inflation on inflation expectations and international financial markets are closely monitored. Moreover, central banks in advanced economies emphasize that the rise in inflation may last longer than previously anticipated due to rising energy prices, imbalances between supply and demand, and rigidities in labor markets. The divergence in monetary policy steps and communications of central banks in advanced economies continue due to their diverse economic outlook. It is observed that central banks continue their efforts to develop new supportive measures and tools to cope with the increasing uncertainties in financial markets.

A strong growth was observed in the first half of 2022. Since the beginning of July, leading indicators have been pointing to a slowdown in growth due to the weakening foreign demand. Compared to peer economies, job creation has been stronger. Considering the sectors that contribute to the employment increase, it is observed that the growth dynamics are supported by structural gains. While share of sustainable components of economic growth increases, the stronger than expected contribution of tourism revenues to the current account balance continues. On the other hand, high course of energy prices and the likelihood of a recession in main trade partners keep the risks on current account balance alive. Sustainable current account balance is important for price stability. The rate of credit growth and allocation of funds for real economic activity purposes are closely monitored. In addition, the spread between policy rate and the loan interest rates driven by the announced macroprudential measures is closely monitored. The Committee will continue to further strengthen the tools supporting the effectiveness of the monetary transmission mechanism.

Increase in inflation is driven by the lagged and indirect effects of rising energy costs resulting from geopolitical developments, effects of pricing formations that are not supported by economic fundamentals, strong negative supply shocks caused by the rise in global energy, food and agricultural commodity prices. The Committee expects disinflation process to start on the back of measures taken and decisively implemented for strengthening sustainable price and financial stability along with the resolution of the ongoing regional conflict. Additionally, leading indicators for the third quarter continue pointing to loss of momentum in economic activity due to the decreasing foreign demand. It is important that financial conditions remain supportive to preserve the growth momentum in industrial production and the positive trend in employment in a period of increasing uncertainties regarding global growth as well as escalating geopolitical risk. Accordingly, the Committee has decided to reduce the policy rate by 100 basis points, and has assessed that the updated level of policy rate is adequate under the current outlook. To create an institutional basis for sustainable price stability, the comprehensive review of the policy framework continues with the aim of encouraging permanent and strengthened liraization in all policy tools of the CBRT. The credit, collateral and liquidity policy actions, of which the review process is finalized, will continue to be implemented to strengthen the effectiveness of the monetary policy transmission mechanism.

The CBRT will continue to use all available instruments decisively within the framework of liraization strategy until strong indicators point to a permanent fall in inflation and the medium-term 5 percent target is achieved in pursuit of the primary objective of price stability. Stability in the general price level will foster macroeconomic stability and financial stability through the fall in country risk premium, continuation of the reversal in currency substitution and the upward trend in foreign exchange reserves, and durable decline in financing costs. This would create a viable foundation for investment, production and employment to continue growing in a healthy and sustainable way.

Source: Central Bank of the Republic of Türkiye
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September 23, 2022

According to the World Bank’s collection of development indicators, which was produced from officially recognized sources, the number of new firms registered (number) in Germany was recorded at 72774 number in 2020. The World Bank provided the actual figures, historical information, projections, and forecasts for Germany’s newly registered firms as of September 2022.
In the most recent World Bank annual rankings for the ease of doing business, Germany is placed 22 out of 190 economies. Germany’s ranking increased from 24 in 2018 to 22 in 2019.

Around 2.6 million Small and Medium-Sized Enterprises (SMEs) were present in Germany in 2022. The vast majority of these businesses, which employed up to nine people, were micro-sized businesses. There were roughly 363,462 small businesses that employed between 10 and 49 people, and there were roughly 55,518 medium-sized businesses that employed between 50 and 249 workers.

Around 5.9 million of the 19.1 million persons employed by SMEs in Germany in 2018 worked for micro-sized businesses, 6.2 million for small businesses, and around 7 million for medium-sized businesses. SMEs employed 63.2 percent of the German workforce, which was a contribution to the non-financial sector of the German economy.

Source: Trading Economics and STATISTA
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September 23, 2022

Tax policy is playing a critical role as countries seek to promote economic recovery from the COVID-19 pandemic and respond to the impact of rapid increases in energy prices, according to a new OECD report.

Tax Policy Reforms 2022 describes recent tax reforms across 71 countries and jurisdictions, including all OECD members and selected members of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting.

The report finds that tax reforms – notably reductions in taxes on labour and more generous corporate tax incentives – have been among the key policy tools that countries have used to stimulate growth and promote economic recovery from the pandemic.

As energy prices rose steeply from the second half of 2021, countries moved quickly to shield households and businesses by providing temporary fiscal support – including tax cuts – and by tapering existing stimulus measures that could add to inflation.

“Recent tax reforms have been targeted at stimulating economic recovery from COVID-19, while countries with the greatest fiscal space have been providing more generous tax benefits for longer periods of time,” said Pascal Saint‑Amans, Director of the OECD Centre for Tax Policy and Administration. “Countries have also used tax policy as one of their main tools in responding to rapid rises in energy prices.”

Personal income taxes and social security contributions were reduced in 2021 in almost all countries covered in the report, with most reductions targeted at lower-income households to support employment and provide in-work benefits. Many countries also increased corporate tax incentives to stimulate investment and innovation.

The most significant VAT reforms focused on the digital economy and e-commerce, including strong growth in e-invoicing and digital reporting requirements. Property tax reforms were less common in 2021, with a small number of countries implementing measures to reduce the use of properties as investment vehicles and improve equity in the housing market.

A Special Feature in this year’s report highlights how tax policy has been used by governments to provide significant support to households and businesses, shielding them from the impact of high energy prices. The report notes that the measures introduced through mid-2022 to lower the price of energy were rapidly deployed and often relatively simple to implement. However, the report also suggests that governments could provide more targeted measures for at-risk groups, improve the resilience of households that are vulnerable to price shocks, and accelerate the development of alternative sources of energy and modes of transport.

To access the report, data, and summary, visit www.oecd.org/tax/tax-policy-reforms-26173433.htm.

Source: OECD
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither Karen Audit nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.

September 23, 2022

In 2021, almost a quarter (23.6%) of all self-employed people aged 18 years and over in the EU were at risk of poverty and social exclusion. Compared with 2020 and looking at activity status, this was the only category that experienced a deterioration in the poverty situation, increasing from 22.6% to 23.6%.

From 2020 to 2021, at risk of poverty or social exclusion rates decreased for the unemployed, pensioners and employees by 1.6, 0.6 and 0.3 percentage points, respectively.

At the national level, in 2021, Romania, Portugal and Estonia recorded the highest shares of self-employed people at risk of poverty and social exclusion (70.8%, 32.4% and 32.2%). Romania, in particular, experienced the highest increase from 2020 to 2021 (5.1 percentage points).

In contrast, the poverty situation for the self-employed improved in 11 countries, with Ireland and Hungary reporting the highest decrease in such rates from 2020 to 2021 (-3.2 and -3.7 percentage points, respectively).

Source: Eurostat
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September 23, 2022

As part of its efforts to battle inflation, which is still five times higher than its target, the Bank of England decided to increase its base rate from 1.75% to 2.25%.

Although it decreased somewhat in August, the UK’s inflation rate remained significantly above the bank’s target of 2% at 9.9% year over year. The biggest price increases have been in energy and food, but core inflation, which excludes these items, is still 6.3% annually.

At the start of the coronavirus pandemic, the BOE lowered its benchmark interest rate, referred to as the Bank Rate, to 0.1% in March 2020 in an effort to support expenditure and growth. However, it was one of the first major central banks to begin a raising cycle at its December meeting when inflation started to soar dramatically late last year.

U.K. interest rates have increased for seven straight months, reaching a level last seen in 2008.

The bank recognized the volatility of wholesale gas prices in a statement outlining its choice, but claimed that government declarations of caps on energy costs would prevent future increases in consumer price index inflation.

But it claimed that there has been more evidence of “continued strength in domestically produced inflation” since August.

“The labor market remains tight, and domestic cost and pricing pressures are still high,” it continued. While the [energy bill subsidy] lowers inflation in the near term, it also means that throughout the first two years of the forecast period, household expenditure is likely to be less weak than anticipated.

Five of its Monetary Policy Committee’s members voted for the 0.5 percentage point increase, while three supported the bigger 0.75 percentage point increase that some analysts had anticipated. For an increase of 0.25 percentage points, one member voted.

The decision by the bank is made against a backdrop of a declining British pound, recession predictions, the European energy crisis, and a set of new economic policies that new Prime Minister Liz Truss is expected to propose.

Source: CNBC
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September 22, 2022

In Q2 2022 the nominal Gross Domestic Product (GDP) in Georgia amounted to GEL 17 979.4 million. The real GDP increased by 7.1 percent YoY, while the GDP deflator percentage change equaled to 8.2 percent.

Significant contributions to the real GDP growth in Q2 2022 is related to increase of valueadded of the following activities: Electricity, gas, steam and air conditioning supply (75.9 percent), Transportation and storage (18.6 percent), Information and communication (27.7 percent), Agriculture, forestry and fishing (10.9 percent), Education (12.0 percent), Wholesale and retail trade
(3.0 percent).

A decrease in the real value-added occurred in Human health and social work activities (-12.7 percent), Real estate activities (-2.7 percent), Construction (-3.2 percent).

The largest share in GDP by activity is held by Trade (16.5 percent) and Manufacturing (10.9 percent), followed by Real estate activities (10.0 percent), Agriculture, forestry and fishing (8.3 percent), Construction (7.6 percent), Transportation and storage (6.5 percent), Public administration (6.0 percent), Arts, entertainment and recreation (4.8 percent).

Source: NATIONAL STATISTICS OFFICE OF GEORGIA
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