The Russian economy has touched the bottom. What's next?

The effect of vaccination will not appear until the fall of 2021, therefore, forecasts of economic recovery are postponed to 2022. But the fall stopped.

Yelena Ivanova, Natalia Seibil

An economy without people doesn't work. This simple truth became apparent during the pandemic. The bad news is that the economic indicators of production and demand for industrial products, according to the calculations of the Institute for the Problems of Natural Monopolies IPEM for November 2020, remain in negative values. But the good news is that economists believe the industrial decline has stabilized. Production fell by 3.4% , demand fell by 6.4% . In just 11 months, these indicators were - 4.5% and - 5.8%, respectively.

- At some point, any fall should "find the bottom", plus the end of the year in our strange economy is associated with the fact that the government "to the chimes" makes much more spending than in the rest of the year. I think that by December 2020, the industry will even show growth, but we will already find out in January 2021, says economist Dmitry Milin.

There are no official figures from Rosstat yet, but economist Georgy Ostapovich recalls that November and December are the most productive months for the whole year, when all financial calculations are finally done, when contracts are knocked down, products are sold completely, because entrepreneurs are not interested in transferring money to next year. since the financial authorities can limit funding to some extent and seize money:

- Industry is not a service sector, not trade, not transport and not construction. There was practically no lockdown, metallurgical plants were not stopped, machine-building enterprises were not stopped. And this is the main problem for the economy. You cannot telecommute workers. You can transfer the accounting department, the personnel department, but not those who work in the shops. I think that the industry will sag by about 3% , possibly less, 2.8% .

Dmitry Milin has darker forecasts. The fall in industry will amount to more than 5% , although Rosstat is likely to "draw" more optimistic figures, and will be wrong. Everyone gave up on the results of this year for a long time, so the recovery in 2021 will only be more cheerful:

- In this sense, Rosstat's activities lack a strategic vision. The embellishment of the situation this year reduces the chances of showing the government's success in economic recovery. Any recession is followed by recovery growth. This does not require government involvement at all. As they said in the USSR, "winter has passed - summer has come, thanks to the party for that." Not a single official will refuse to attribute the success of natural restoration to himself.

Our everything

Oil production in November fell by 11% compared to November 2019, over 11 months of this year it decreased by 8.3%. IPEM believes that expectations of a quick recovery in the industry have not yet been met. But the main factor behind the decline in production is not the pandemic, but the OPEC + deal. Russia has committed itself to cut production by 18% from the baseline level of 11 million barrels per day. From January 2021, the decline was supposed to be 14% - to 5.8 million barrels per day. On December 3, the cartel decided to adjust this figure due to the second wave of the pandemic, and Russia will be able to slightly increase production.

The world situation has improved for producers and global consumption exceeds demand. Thus, world reserves began to decline. Due to the lockdown in 2020, oil storage facilities are full. Even if the production were fixed at the level at which it was, it would have gone up in comparison with the five-year average. It is beneficial for manufacturers to reduce excess inventory. If this happens, production can be increased without fear of collapsing the price, explains Vyacheslav Kulagin , director of the center for world energy markets:

- The volumes have become higher and the price dynamics are no longer $ 30, but $ 50. Plus, you also need to understand that our budget is ruble, and oil is sold for dollars. The exchange rate has changed compared to the previous year. Conversion into rubles compensates for the loss in price.

Along with services, global transport has been particularly affected by the pandemic. Therefore, the dependence is obvious: transportation has decreased - no fuel is needed. There is no need for fuel - they buy much less oil, and storage facilities are clogged. Georgy Ostapkovich says:

- Nowadays they are mining mainly for the sake of reserves, so that when demand opens up, transport opens, there is supply. And 65% of oil is consumed in transport - these are ships, aviation, land transport. Transport will open, oil consumption will immediately increase, all stockpiles will be printed. There is a problem with the vaccine, there is a problem with the opening of transport. If the economy starts working, the consumption of oil products will increase. Sometime this should all end.

GDP and budget

According to Dmitry Milin's estimates, the budget deficit will amount to more than 5 trillion rubles . This is a heavy blow to the country's budget system. The decline in oil production affected the country's revenues. Vyacheslav Kulagin says:

- Obviously, this year all the months, except for the first two, we receive less money in foreign currency from the oil industry, because we have taxation that depends on two parameters - the volume of sales and the price of sales. Accordingly, both the selling price and the volume of sales are lower than last year. It is clear that less money comes to the budget.

Still, the price of $ 50 per barrel is good news for the Russian budget. It allows not only to reduce the budget, but also to put everything above into the reserve fund of the government and the NWF. Now we have approached this level, so in terms of budget balancing, everything is not so bad, it is not April, when we faced a catastrophic situation, and oil dropped so that taxes were not paid for certain supplies, Vyacheslav Kulagin recalls.

The budget will go into a 3-3.5% deficit, Georgy Ostapkovich believes, but he sees nothing wrong with this - the whole world is working with a budget deficit due to the coronavirus pandemic. In other countries, even developed ones, the budget deficit is much larger:

- There is nothing wrong with that, even proceeding from Keynesian theory. John Maynard Keynes, a great economist, said: when you have natural disasters, war, economic crisis, always increase government spending, save the economy, and most importantly, save people.

The fact that the gross domestic product will decline was clear in the spring. According to the Ministry of Economic Development, the drop will be 3.9% , but the ministry is responsible for economic growth, so their forecast is always the most optimistic. The Accounts Chamber predicted a fall in GDP by 4.2% , the Central Bank - 4-5%. Ostapkovich believes that GDP-fetishism is observed in our country, and the main thing is income and employment of the population. Two more important indicators follow from these two parameters - the poverty level and the concentration of the population's income. It is necessary to ensure that there is no income stratification:

- What difference does it make whether the economy will decline 3.9% or 4.2%? What is 0.3%? This is 300 billion rubles - half of the Yamal - LNG plant. And to hell with him! Well, we will not build half of the plant this year. No one will die from this. The main thing is to be normal with income and employment. And at the expense of growth, we will recover these losses later, '' says Georgy Ostapovich.

The peculiarity of the current period is that the recovery of the world and Russian economies is influenced not by economic factors, not by labor productivity or innovation and investment, but by non-economic factors. This is, first of all, when the population will be vaccinated to the extent that lockdowns will no longer be needed. And second, will the printing press be turned on in the country until then?

Prospects for 2021

With a conservative or favorable development of the situation with covid in the world, the consensus forecast in the world is that the next year will be positive. By the fall of next year, about 60% of the population of developed countries, including Russia, will be vaccinated. If the government does not delay the implementation of budget spending plans in the first quarter, as is often the case with us, says Dmitry Milin , then from the second quarter of 2021, growth will begin in Russia, which will be clearly visible by the end of 2021, and adds:

- Especially if the regional authorities reduce their senseless prohibitive itch under the pretext of a “fight” with “covid”, and in fact, cover up the consequences of the “optimization” of medicine carried out by their own hands, with a reduction in the reserve of places in infectious diseases in hospitals, for the sake of self-affirmation on resigned citizens and defenseless from the administrative arbitrariness of business.

In the second half of 2021, the economy will begin to recover, lockdowns and telecommuting will go away, Professor Ostapkovich agrees :

- The fall, which we will have in the world of about 5%, we will not beat back. We will beat off 3% -4%, and a full recovery to the base of 2019 indicators, both the world and Russia, will most likely come out no earlier than spring 2022. And after that, sustainable economic growth will begin.