Economists - about the current moment: there is no way out of stagnation

The coronavirus pandemic is gradually declining, and therefore analysts are in a hurry to make predictions for the future, at what pace Russia will get out of this unexpected crisis. Quite optimistic about the prospects of the Russian economy in 2021, scientists from the Institute of Economic Forecasting of the Russian Academy of Sciences (INP RAS), who believe that by the end of 2021, GDP will grow by 5%:

“The measures to support the economy (growth in budget spending, easing of monetary policy and measures of social support), launched by the government, turned out to be quite effective. The countercyclical policy, coupled with an increase in price competitiveness as a result of the devaluation of the ruble and the gradual recovery of world commodity markets, formed a rather powerful wave of recovery growth, the extrapolation of which to the II-IV quarters of this year leads to such a high estimate for the year as a whole".

The main risks "in the short term are associated with the acceleration of cost inflation (which has actually already happened) and attempts to contain it by means of monetary policy".

However, analysts at Sberbank's Center for Macroeconomic Research (CMR) are not so optimistic about the prospects for the Russian economy for 2021. Briefly, their conclusions look like this:

- In April, inflation amounted to 5.5% y / y. The pace slowed down from 5.8% YoY a month earlier, but this is mainly a base effect: in April last year, prices rose faster due to the shock of the pandemic. Especially high rates are observed for food and non-food products (6.6% YoY and 6.2% YoY), services are becoming more expensive (3.3% YoY).

- The jump in prices was largely caused by external shocks: the weakening of the ruble, the rise in world prices for metals, timber, food and electronics, problems in animal husbandry, and restrictions on international tourism. Some shocks will continue to affect in the short term. In addition, inflation is spreading more and more in the wake of the recovery in demand.

- Monthly growth rates are slowing down, the stage of rapid recovery is coming to an end. According to the CMI, in March economic growth slowed down to 0.2% m / m against 0.6% m / m earlier. In April, the pace could have slowed down even more, judging by the first indirect indicators.

- The growth in consumer demand is due to the spending of savings and the accumulation of debt in the context of record low rates amid falling incomes of the population. Inflationary expectations are intensifying, putting pressure on prices.

But experts from the Proeconomics channel believe that the Russian economy is returning to its previous three-circuit basis:

- The first contour - export enterprises and industries that live separately from another economy. Interested in a weak ruble. This contour starts to rise again. There are also banks here that were doing well during the pandemic crisis, but will be fine.

- The second circuit is an industry tied to government orders (including the military-industrial complex, infrastructure projects, housing and communal services), to service export industries (Russian Railways, power generation, etc.). Export-oriented agricultural holdings also fall into both circuits. They are also interested in government assistance (for example, subsidizing rates). To help him and the poor labor market - low wages do not allow to fall into negative areas of low profitability.

- The third contour is the consumer market and households. Here, in general, there is no way out of stagnation. They are interested in a strong ruble, in the growth of real incomes of the population - this is not now and is not in the government's plans.