Must the war-induced crisis be one with unprecedented chain reactions and damage to our economies? What impact can it have on investments? Or on our overall financial health?
We are here today to meet more or less justified financial worries with solutions. To go to solutions, wherever we stand financially.
Today we work with care on open-heart financial emotions, with the help of financial coach Mihai Constantinescu.
1. Mihai, what are people’s financial fears nowadays? Are they different from the problems our clients have in other periods of crisis?
Today, people’s level of anxiety is extremely high. We are coming after 2 years of the pandemic, followed by the outbreak of the war between Russia and Ukraine just a step away, being bombarded by alarmist information but also learning to live with the danger every day. In these conditions, the decisions we make are often more emotional than rational.
The biggest financial fear is that of losing the accumulated amounts. The fear of death is a fear that hovers now more than ever. Under these conditions, people tend to make irrational decisions, from taking all the money out of the bank and keeping it ‘’in the mattress’’ or changing all the money into EUROs and taking it out in cash.
2. Was there an increase in financial concerns? Or rather just a request for help in managing financial actions, generated by the war?
We could see a sharp increase in financial concerns – concerns coming from 2 directions – the first would be how we secure our money in wartime and the second direction (or concern) is coming from the area of skyrocketing inflation. More and more Romanians are beginning to realize the need to turn to an independent financial coach/advisor to put their finances in order and to make rational decisions under emotional pressure.
How does a financial expert see the current crisis? What about the new aspects, which can knock on the door?
Even if in Europe and Romania it seems to have ended, the pandemic generated by Covid-19 is still not over. There are still areas of the globe with closed cities. The current situation is still uncertain. The war between Russia and Ukraine also puts additional pressure on inflation, which is already at high levels, but also on economic growth.
This war did not fundamentally change the global economic situation but rather accentuates what is already happening.
Inflation was rising before the outbreak of war, and volatility in the markets was present. Looking ahead, there are many issues to consider. The most important are inflation and geopolitical tensions.
If inflation remains so high for a longer period and/or if geopolitical tensions worsen, then we may see a slowdown in the level of economic global growth and possibly entry into recession. For now, this scenario has little chance of happening.
In the base scenario, geopolitical tensions will calm down and inflation will decrease towards the end of 2022 and 2023, events that will lead to the economic growth scenario.