A new series of statements of the financial authorities and analysts on the Russian economy out of recession does not mean that we have a steady growth. According to experts interviewed by Colossal, no visible to the population of the country signs the economic recovery is not expected for a long time — at least in the next year the economic climate is unlikely to be much different from the current one. This means that the bulk of the population will experience hardly any change for the better, even if statistical agencies are to report moderate growth makroekonomicheskikh indicators.
Not a reason for national optimism
“The index rating of Russia’s GDP suggests that the recession is behind us, and ahead of a slow growth economy”, — is spoken in published on the days of the July Bulletin of the Department of studies and forecasting of the Central Bank of the Russian Federation. The position of the Central Bank was immediately supported by some independent Western analysts. In particular, the European Central Bank in its latest economic Bulletin said that in the first quarter of 2016, Russia’s GDP returned to growth (plus 0.3 percent by the last quarter of 2015). Russia’s withdrawal from the recession and stated the Agency Bloomberg, noting the significant growth of demand for electricity in the last three months, the increase in rail and container transportation, and also minimal in recent months, the volatility of the exchange rate.
Rosstat data for the first half, published on August 17, indicate that Russia’s GDP fall if not stopped, it has slowed down. According to preliminary estimates, in January-June, GDP declined by only 0.9% compared to the same period last year, whereas a year ago the comparable figure was minus 3.7 per cent. The index of industrial production for the reporting period amounted to 100.3% (previous year — 97%), the growth in agricultural production is much stronger (plus a 3.2% vs. 0.3% in the first six months of 2015), freight turnover went into a plus (101.3% for the first half of 2015, a year earlier was of 98.4%).
The weak link indicating an unsatisfactory condition of incomes of Russians, remains retail, it continues to remain negative, although the dynamics of the fall is definitely slowed down. In the first half of 2015, retail has lost 8.5%, while during the same period this year — just 5.6%, while more than halved the rate of inflation in the consumer market (107,8% vs 116%). About a certain improvement of the economic situation evidenced by the statistics of foreign trade: its volume continues to fall but at a slower pace than a year ago (77.4 per cent against 67.1 per cent).
However, even accepting that the latest statistics can be interpreted as the output of the Russian economy out of recession, it is still absolutely not a reason for optimism.
First of all, the end of the recession has been mentioned before — particularly successful in that the Minister of economic development Alexei Ulyukayev. “By definition, a recession is when two consecutive quarters of decrease. In this sense, the recession is over, it’s not,” he said, for example, in February. And in may he even said that assessment in hindsight, commenting on the slowdown of GDP decline in the first quarter: according to the speaker, the dynamics of the decline in GDP was “so close to zero that I don’t change my position that since the third quarter of last year, we out of the recession came.” The same view was held in November last year and analysts S&P, which said the release of the Russian economy from recession, while giving a forecast for GDP growth fit within the boundaries statpogreshnosti — 0,3% in 2016 and 1.8% in 2017 at a comparable price of oil.
Actually, this is the main question arising from the alleged recovery from the recession: will follow it more or less steady growth, or the Russian economy will be a long time lie in the null zone? A cease decline is recorded only by economists — in order to exit from the crisis felt by the population, the economy needs to grow at least 4% per year. And this despite the fact that the fact that the recession is not recognized by all experts — for example, in late June, the Center of the HSE in its forward-looking analysis noted that the recession, on the contrary, deepens, and at the end of the year the decline in GDP could reach 1.5%.
Trap four percent “ghetto”
Leading Russian experts-economists, providing Colossal exclusive comments on the prospects of exiting the crisis also differed in assessing the current situation.
“Credibly claim that the Russian economy is out of recession, it will be possible in the case when we see a clear growth tied to strong demand and a recovery in certain industries. In the meantime, the economy fluctuates around zero. In may-June there was a feeling of change for the better, judging by the dynamics of consumption and indirect data (not just direct) investment activity, but in July, again there was a deterioration of macroeconomic indicators”, — says head of analysis and forecasting of macroeconomic processes, Center for macroeconomic analysis and short-term forecasting Dmitry Belousov.
The Chairman of the Board of the Foundation “Center for strategic research “North-West” Vladimir Knyaginin, by contrast, shares the position of the Central Bank and Ministry of economic development. According to him, the recent statement of the Central Bank on the Russian economy out of recession corresponds to the results of recent surveys of the Gaidar Institute, which show that the business has adapted to new economic realities and more or less understand how to respond to them, and the citizens, according to the surveys of the HSE, also adapted to the current conditions.
Therefore, the main issue, says the center, now is adapted the budgetary system: “This question was the leitmotif of the latest St Petersburg economic forum, which began the discussion of the budget in 2017 suggests that it will also be the new reality — many areas will receive funding at the level of 2015”. However, according to Vladimir Knyaginin, the output of the economy out of recession offers certain new opportunities for financial-economic authorities: there is a more stable basis for macroeconomic regulation, it is possible to do more project-oriented measures.
With the Bank’s assessment of the current situation in the economy agrees and Professor NRU HSE Dmitry Evstafiev, stating, however, that the phrase “recession” is purely technical: “This means that the statistical indicators are in the positive zone — but only just. In itself for a person who is not engaged in investment activity, the recovery from the recession means nothing”.
Despite the significantly different stance on the question of how did the Russian economy out of recession and that means all three experts agree that the prospects of transition to a rapid growth in the near future actually do not exist. According to Vladimir Knyaginin, today almost all experts agree that growth will be very modest, in the framework of the so-called “four percent of the ghetto”, which gives a sense of recovery at the empirical level. Speaking about the prospects of acceleration of the economy, the center, in fact, reproduces the well known position of the financial-economic bloc of the government and the Central Bank: “in order For the dynamics of growth was higher, we either need to radically change the situation on export markets, or structural reforms that take effect immediately”.
The forecast Andrei Belousov in 2017 — a sideways trend with a slight hint of growth: “Inertia gradually lead us into growth, but it is unlikely to exceed two percent per year, suggesting a tight control on costs, and people in this situation would be not too easy. It is not necessary to expect high growth rates, until we create the grounds for it in the form of new markets and industries. “Low-hanging fruit” in our case is the possibility of promotion to the markets of agricultural products and the targeted expansion of a number of industrial companies under the mandatory condition of readiness of big business to improve its efficiency. Strategy — implementation of the National technology initiative (NTI) and participation in the formation of a number of new global markets in which we have some potential. But this is clearly not the issue of the next year.”
Similar to the representation of strategy of transition to growth, and Vladimir Knyaginin. According to him, at the time of output of the economy out of recession are always new opportunities for business, so we can assume that after two or three years, significantly enhanced the position of development institutions in the industry such as industry development Fund (Fund Komissarova) and the national technology initiative with projects focused on an exit in a fundamentally new for the Russian economy sector. The state represented by the Ministry of industry and trade, believes the Duchess’s care not only about their breakthrough in the new technological order, but the conditional support of traditional industries — car industry, aircraft industry, light industry, etc., which stages out of the recession is required to optimise existing resources.
Dmitry Evstafiev sees prospects of growth of the Russian economy from scratch, but still running in her processes of import substitution: in his opinion, in any case they will start to give result by end of 2016 — beginning of 2017, even though they’re man-made and manageable. However, in the population, again, hardly appear in this context many reasons for joy. “For us as a country the most important is the growth of basic industries, but for the average person, the major development of the consumer market, including price stabilization (which is already there), and wage growth, and this is not expected — says Evstafev. — Although the revival of trade is inevitable, if the government can’t figure out how to redirect the money of the population for investments”.
The ballad of the Central Bank
Another point of significant disagreement between the experts — the role of the Central Bank in the process of overcoming the economic recession and move to growth. Polar points of view in this case is Dmitry Belousov and Vladimir Knyaginin. The latter believes that the way out of recession is unlikely to be a signal for the Central Bank about the need to reduce the key rate, and cites a number of arguments in favor of the inflexible position of the Ministry of Elvira Nabiullina: “the Bet cannot be reduced with impunity without the simultaneous reduction of inflation — in this case, you will receive a flight from the rouble. The idea is to reduce the rate and guide to cheap credit funds for lending to investment projects look attractive, but, unlike many other countries, we are unable to export their inflation. Therefore, the logic of CBA is that only after inflation fell to 5% you can lower your bid and go to the lending to industrial growth.”
In General, Vladimir Knyaginin, evaluates the work of financial authorities is very high: according to him, they believe that in the medium term task is clear, barring any global disasters. So if the budget passes 2017 and 2018, then in 2019 the economy may go on a significant rise, but a very large value will have the stability of the banking and financial systems, which by the time of the acceleration of growth must be in very good shape.
Dmitry Belousov, on the contrary, sees in the inflexible policy of the Central Bank a number of risk factors for economic growth: “the Central Bank gave a boost to growth, leaving unchanged the key rate, although it is now sufficiently small positive signal that the economy has moved to growth — it may be rate reduction, and a small upward movement in oil prices, and any distinct solution state to remove the uncertainty that weighs heavily on the economy. But the Central Bank took a tough stance, which is detrimental to development than help it. It draws us in a situation that is very dangerous for growth: fiscal consolidation expected in next year, combined with tight monetary policy. This situation is rare for the world of practice and unhealthy”.
According to Belousov, the focus of the Central Bank solely on the reduction of inflation to the level of 4-5% can be a lot of negative consequences if this is done at the cost of lowering investment, it is possible to squeezing the available funds on the currency market — paradoxically — the risk of inflation (especially that due to a lack of investment in their own production begin to return import). “What’s the point to invest in the real sector with a yield of 3-5%, when you can play in the financial market with a yield of 10% and carry significantly less risk? — plays Dmitry Belousov logic reasoning of a potential investor. — TSB all of these arguments, of course, hear but not really see.
Dmitry Evstafiev is not inclined to show, traditional Bank charges in the “clip” liquidity, according to him, that money in the economy has increased, — a fact, visible without statistics, and the positive results in the policy of the Central Bank has. However Evstafiev blames the financial authorities that they are not too keen Keynesian mechanisms to stimulate growth: “the Industry is now recovering, and personal consumption — not so much. And the replacement of personal consumption institutional is very slow, because it does not fit the dominant liberal picture. Within its framework it is considered that when the growth of trade (sales of goods) is achieved by stimulating personal consumption (reduction of taxes, a loan) — that’s fine, but when generated programs that stimulate the purchase of industrial equipment, and transportation for organizations is conceptually wrong. So if not a bridge to the Crimea and not the road around Moscow and a couple of projects, the picture would be very bleak”.
Nikolay Protsenko
