If you believe the economy Ministry, Russia is on the threshold of prosperity. By 2019, GDP growth should reach 4.5%, while capital outflow to decrease to zero. All that is needed is that the oil has risen to $ 55 per barrel. These data are presented in the “target” variant of the macroeconomic forecast of the Ministry Alexei speaker in 2017-2019. The document has already been approved by the government of the Russian Federation, and now on its basis to form a budget, reports “Kommersant”.
The final version of the socio-economic development of the Russian Federation has retained the following scenarios:
— “Basic”. It laid the price of oil at $ 40 a barrel, and are considered more rapid than expected by the economy Ministry, inflation in 2016 to 5.8% at the end of the year, against expected 6.5 per cent.
— “Basic+” calculated based on the rising prices of oil in three years — from $ 43 in January 2017 (close to current prices) to $ 55 in December 2019.
— “Target” scenario assume the same price increase, but suggests a more significant increase in investment flows and private investment, plus some limitation of growth of real income in the years 2017-2018.
Interestingly, the “basic+” and “target” assumes an increase in annual oil exports from Russia (an increase of 11 million tons over three years). But quite dramatically, from the current 150 million tonnes to 137 million tonnes, is expected to fall, the export of petroleum products. The fact that when GDP growth, according to the economy Ministry, not to avoid high expenditure of petrol and almost the entire increase in gas production in Russia.
In General, a necessary condition for the implementation of the indicators in all three scenarios is the ideal state of the world economy. Forecast laid very gradual decline in China’s growth (6% GDP in the years 2017-2019), the acceleration of growth in the USA 1.5 times, and world growth at the level of 3,4−3,5% (now 3%). Under such external conditions, the probability of higher oil prices is increasing.
The problem, however, is that the optimistic version assumes an increase in the rate of investment imports. So, in option “basic+” it in 2017 increases by 10.5% (physical volumes, then they are growing at above 7% annually), reaching $ 52 billion Option “target” shows the limits of the proposed model of growth is zero, the outflow of capital in 2019, the investment growth of 6.8%, increase productivity 5%.
In fact, in the most optimistic scenario we are talking about the execution of orders of Russian President Vladimir Putin is to provide the trajectory of GDP growth to 4-5% by 2020.
How true the economy Ministry, in reality waiting for Russia?
— The basis for budget planning 2017 and the next three years laid the “base case” scenario, the Ministry of economy, — said the head of “Finance and Economics” Institute of contemporary development Nikita Maslennikov. — This script is openly conservative, and he is a realistic measure. In particular, he suggests that the government of the Russian Federation will not make large-scale efforts to advance the structural agenda, and will not pave a quick route to a new economic model. The “baseline” scenario, talking about smooth evolution of the institutional-regulatory environment that has developed in Russia, without significant reform measures.
That is why at “baseline” scenario, we derived the average annual growth of just 1.5% of GDP in 2017-2019, plus a significant reduction of Russia’s presence in the world economy.
As for the “target” scenario, he assumes that the government will gather strength and begin a difficult cycle of structural reforms. It is expected that the Cabinet will achieve much success and we will have growth rates that guarantee social and defense obligations of the state.
But on the “target” scenario, and the scenario “baseline+” there are issues caused by the overly optimistic view of the economy on external conditions.
“SP”: — You mean the sanctions?
— It is not so much about sanctions, and not even about oil prices. In the next two years, the average annual oil prices will probably remain in the range of $ 45-50 per barrel. This means that the first half of 2017 for the world economy will be quite heavy.
Balancing the oil market is not yet visible — on the contrary, the excess supply increases. In General, the price situation looks not optimistic.
Meanwhile, in the “target” scenario, the economy Ministry establishes a price of $ 50-55 per barrel, but still on the Russian oil Urals. This is, frankly, unlikely.
The second point — the economy is clearly overestimates the state of the global economy for the better. The Agency does not take into account the risks that became apparent today, and which can be realized in the middle of 2017. Meanwhile, these risks are fraught with the slide of the world economy in the global economic turbulence, and the subsequent decline.
“SP”: — what are these risks?
— “To sum up” China can. If you make adjustments to the official Chinese statistics, which is causing more problems, China’s growth rate will be below 6% of GDP. Plus, in China there is a huge risk that would burst the debt bubble with the Chinese authorities and failed to cope.
Other risks — not a very good situation not only in the EU and Japan, but even in the United States. The States seems to be developing steadily. In fact, they are entering the final phase of the economic cycle, and the probability of easing growth down to briefly dip into recession is quite high. Moreover, the American braking can happen within the next 12 months.
Let me remind you that on 21 September, the Organization for economic cooperation and development (OECD) reduced its forecast for real GDP growth in the Eurozone for the current year by 0.1 percentage points to 1.5% from 1.6% in the June forecast.
The OECD indicates that growth slowed in the second quarter due to weak domestic demand and stagnation in the short recovery of the investment.
The forecast of the world trade organization (WTO) is also dramatically slid down. The organization lowered its forecast for global trade growth this year by more than a third due to the slowdown in China and falling import levels in the United States. As stated by the head of the WTO, Robert Azevedo, “a new index of 1.7%, much worse than expected in April at 2.8%, and marks the first 15 years of the case when international trade is growing slower than the world economy.
According to the WTO, after a long period of growth through globalization based on international trade, governments are increasingly trying to protect their own industry is in a period of economic hardship, and the economy rely more on domestic consumption.
“SP”: — What does this mean for us?
— We focus on what we will increase net exports, and that it will make a positive contribution to GDP growth. In fact, the real risk assessment, it may be that the contribution of exports to GDP growth next year will be negative due to the rapid growth of imports.
However, the “baseline” scenario, the Ministry of economy issues, by and large, no. Let me remind you that it involves the reduction of investments in fixed capital by 3.7% by the end of 2016, the failure to reach Russia’s Central Bank targets inflation until 2019, and the slow strengthening of the nominal exchange rate, with almost no real appreciation.
Retail on the “base” scenario is reduced in 2016, 4.6% in 2017. In the end, at $ 40 per barrel in 2017, Russia’s GDP will increase by only 0.6%
If you call a spade a spade, it means stagnation, with uncertain prospects for economic restructuring. And this scenario is more likely than benevolent “target”…
— The optimism of the economy due to the ordering of power and optimism this is quite neat, — said Professor of Moscow state University, doctor of economic Sciences Alexander Buzgalin. — The world economy now, it is waiting for the stagnation, rather than in anticipation of new economic growth. Then there is an underlying movement, discusses the path of new industrialization, are wide-ranging debate about the changing system of institutions, failure of pseudo market fundamentalism. Pseudo market because it gives winnings to the participants of the free market and large corporations that manipulate the major players in this market.
However, these changes are not very likely — sorry, I am not optimistic in relation to changes in the world market.
As for the main — what is happening in Russia — here the situation is different. Here, I think it all depends on the changes in our country. While these changes will not happen, and the situation in the Russian economy will not change dramatically…
