Think about the bottom more or less sorted out. Traditionally, the President lied about the fact that Russia has passed the bottom of the crisis last year. No the bottom is not yet completed, except that down. Economic situation continues to deteriorate, GDP, industrial production, incomes, retail sales – all reduced. Grows only unemployment. While not very noticeable, but growing.
And to say that the situation has stabilized and then begin to rise – no way. This is recognized even in the government and the Central Bank. The leadership of the country officially declares that without structural reforms the economic recovery will not be. But reform is not even in the project.
And the key rate is at 11%, which allows businesses to take credits for business development and to invest in production. Expect the recovery could be at the rate of 6%, but Central Bank policy is such that this bet we will see not earlier than inflation will fall to 4%, that is… most likely never, because the inflation target of 4% in the Russian economic realities absolutely utopian.
I briefly recounted what in detail wrote yesterday.
Add to this, is to understand the level at which the Russian has slipped (or rather edinorossovsky) Economics, statistics for the average salary:
In 2015 the average salary in Russia in terms of U.S. currency was $558.
Thus, the average wage in Russia is on par with Kazakhstan, where a similar figure last year was $549.
Belarus has so far less – $415, but may soon “catch up” with her. But if we exclude from the statistics Moscow, where salaries are significantly higher than the average for Russia, Belarus, presumably, already “caught up”.
By the way, purchasing power parity, Russian wages have caught up with Belarus, because there prices are lower.
But the main question is – what happens next?
Will the drop in the economy to slow, after which Russia still will be a bottom in a good way, even if not in this, and next year, and then start recovery and live will finally become better and more fun?
Or the economic decline the opposite will be accelerated and will come to truly rough patch, when we will remember in 2016, the first year as very good?
Let’s start with the official point of view on this issue.
Point of view in the government on the future of the Russian economy are rather contradictory.
On the one hand, we are promised GDP growth next year, albeit small. But on the other hand, Nabiullina (head of the Central Bank), Kudrin (presidential adviser on the economy) and members of the government almost unanimously say that without structural reforms the economic recovery is not expected.
And structural reforms will not see even on the horizon. Personally, I have not heard anything about the planned structural reforms of the economy. From the mobilization model declined in the last year. And other ideas were reported. If someone heard something about the planned reforms – tell us.
And note that reforms have to plan – you have to implement them. But it will take time. If any reforms would be carried out and end successfully, that the experience of pension reform and education reform – not a fact. And the transformation of militia in police – another example of reform that is as it is, but as not.
However, economic reform is not even in the draft, so it makes no sense to guess about them.
In total, the government promises us GDP growth next year, but recovery in the foreseeable future does not promise, politely referring to the structural reforms that are either by themselves should begin, whether due to fly the aliens and hold them.
So, if all goes in accordance with the statements of the government – the Russian economy will be hanging out somewhere around the current level, as something in the hole. GDP will grow by some symbolic interest in the year, and the income is likely to continue to decline, because all growth will eat raw Corporation that actually belongs to Russia.
The rich will become richer and the poor poorer, as expected drops in the country during the crisis. This applies even more to Russia, with its primitive commodity capitalism.
And so it will last a few years at least, before the presidential election.
During these two years, our revenues will decline another 10-20% from the current level (average, of course, each separately can be either worse or better), and the government will report on some symbolic GDP growth.
And then Russia will elect a new President, Vladimir Putin, and he will save us, will lift the economy from the bottom, planted his hands the clouds of crisis and will do the rest, that he could not make his predecessor, Vladimir Vladimirovich Putin.
I, of course, kidding…
Above I described a scenario which directly follows from the statements of the government. And this scenario I believe… optimistic.
The reduction of income by 10-20% for a couple of years – can bear. And there is a new President, new promises, the world Cup, another Crimea…
In short, not a bad option.
It’s a shame, of course, that salaries in Belarus in two years will be higher, especially at purchasing power parity. Even more offensive, if in Ukraine will be higher. China already has higher also hurt. But you can live. Ukrainians somehow survive and we will not perish.
But this, again is an optimistic estimate.
The reality may be considerably worse.
The fact that the Russian economy has problems that constantly accumulates and can backfire, greatly worsening the situation. There are thin places. Where subtly there, as you know, and tear.
About all the fine places to tell hardly I can, I will outline only a few places.
One thin place –
The debt load of the population.
Last year quickly began to grow arrears. And the collectors is not by chance began to collect in a variety of ways, what has already been said.
Further, the level of debt and overdue debt will only grow. Maybe not as fast as last year, but will grow. Because at lower income to repay loans with high interest – very hard.
Last year the majority of borrowers pay on loans, which are scored before the rate hike. But in this and next year have to pay at a higher rate. As disposable income decreased.
This means that will increase the late payment and debt load. And in stores the population will spend less and less money. As a consequence, trade and production will continue to decline, and after that pay and then in a circle.
And not the fact that falling incomes, retail trade and production will slow down and the situation stabiliziruemost at least a year.
The decline in production and trade Vice versa can be accelerated, if akreditovannye buyers will begin to save more and more.
But there is another thin place.
The reduction of investment in fixed assets.
Yesterday was the statistics that investment in fixed assets continue to decline, and the rate of decline is the same as a year ago. And that’s too bad.
The level of investment in fixed assets in recent years in Russia was very low, and the reduction, and even at the same pace that last year – completely wrong.
Experts News (TV!) in the program “exchange Rate of the day” has evaluated the level of investment in fixed assets as critically low.
That’s too bad, because fixed assets – equipment, means of production. The low level of investment in fixed assets means that production is not just lagging behind competitors in other countries, but also banal stops because equipment tends to wear out and fail.
The decline in investment in fixed assets, which were already very low, the degradation of the means of production and further de-industrialization of the country.
This means that Russia not only will not move from raw model of economy to a production, but on the contrary the share of raw materials in the economy will continue to grow.
The structure of the economy will deteriorate.
Let me remind you that the government and the Central Bank officially announced – without structural reforms the recovery of the Russian economy is impossible. And deindustrialization, and the deterioration of the structure of the economy is the reverse of the reforms process, the process of degradation.
This means that instead of restoring the economy, we will receive a further decline.
Thus, Russia has prospects to deterioration of the structure of the economy, reduction of industrial production, lower incomes, rising debts and overdue debts, the decline in retail sales – all at the same time.
And each of the factors will affect others and reinforce them.
Will the crisis with positive feedback, dispersing himself.
Of course, raw half of our economy will not be reduced, unless of course again not cheaper oil, and the production will not stop completely. But the recession can still be very serious.
And most importantly – a year ago, many refused to optional “extra” purchases, in the future will increasingly have to skimp on that to save you just can’t.
And now attention – a question:
Than 2 years the government will again prove the necessity to vote for Putin if the economic situation in Russia closer to Ukrainian and will sometimes remind you of the 90-ies?
Today, still operates two arguments that suit many:
The first argument – if you change Putin, will be as in Ukraine.
The second argument – if you change Putin, will come the liberals again in the 90s.
But what if in two years when the Putin will be “as in Ukraine” and “as in the 90s”?
What arguments will remain in the Kremlin?
Krymnash? Syria? Chechnya? Terrorism?
We’ll know soon. Not too long left to wait.
Know, because we have passed the bottom in a downward direction. Front – bottom…
