The crisis began to accelerate. When to wait for the peak and in what year the economic recovery will begin - Academician of the Russian Academy of Sciences, Doctor of Economics Abel Aganbegyan spoke about this and much more in an interview with Novye Izvestia.
- You are among those economists who predicted that the current crisis would be deep enough. Six months later, your forecast has not changed?
-Did not change. The depth of the crisis should be considered from the second quarter of 2022 and, say, to the second quarter of 2023. In my opinion, during this period the crisis will be much deeper than in 1998-1999, when the gross domestic product fell by 5%. And the crisis of 2008-2009, when GDP fell by almost 8%. And this crisis will be three times deeper than the recession of 2015 and the recession in 2020 due to the coronavirus pandemic. And there, and there the GDP decreased by only 3%.
Of course, its duration and depth cannot be compared with the ten-year crisis after the collapse of the USSR. That was perhaps the deepest peacetime crisis in the last 200 years among the major countries of the world. Close to him was the Great Depression in the United States in 1929-1933, but it lasted half as long.
I think that the decline of our economy in the era of sanctions against Russia will be about 10% of the gross domestic product in this period. And, perhaps, close to this in industry.
-What will happen to one of the most sensitive and key indicators - the real disposable income of the population?
- The situation is worse with the dynamics of real incomes of the population and final consumption of households. Real incomes for 2014-2019 decreased by about 10%. In 2020, due to the pandemic, they decreased by another 3.5%. But in 2021, the level of real income was 1.5% higher than the level of 2019. But from the second quarter of 2022, real incomes, according to our calculations, will decrease by another 10%. As a result, they will be 20% lower than the level of 2012 and 2013. Accordingly, the final consumption of households will also decrease significantly.
At the same time, in my opinion, the number of poor people will increase by a factor of one and a half. And unemployment will double, including hidden unemployment, which is not sufficiently taken into account in our country.
-A fall in real incomes of the population by 20%, a doubling of unemployment, including hidden. These figures indicate that general poverty will begin.
- Endemic poverty was in the 90s, when GDP fell by 1.8 times, and not by 10%, as it is falling now. And then 45% of the population lived on incomes that were below the subsistence level. Before the crisis, there were 18% of such Russians. Perhaps they will be 25-30% when the crisis in the 3rd-4th quarter reaches its maximum.
But these 18% of Russians - yes, they live on a beggarly level. These are people who think what to buy to eat. They can't go to a regular Pyaterochka and pay for something they like. They have to choose their food because they can't afford to eat meat every day. Let's just count - 13 thousand rubles per capita. One and a half thousand tax, remains 11.5 thousand. Of these, utilities. On average, according to research, this category takes 16% to pay for housing. On hand remains 9.5 thousand rubles for a month! Approximately 300 rubles a day - for all remaining expenses.
How will the middle class survive this crisis?
-In conditions of economy. Only people will look not at the cost of a package of milk, but here - a blouse is hanging. Beautiful. I like it, but now it's too expensive to buy.
Every family should understand that for several years they will have to live in conditions of austerity.
-When will negative processes begin to accelerate? July has already shown a crushing collapse : in one month, the federal budget deficit amounted to a record 890 billion rubles. Almost 40% collapsed VAT.
- It is important to understand the reasons for such a sharp tax cut. If VAT has been reduced, then sales of goods and services from which it is collected have decreased. And the reduction in income taxes is associated with a reduction in the activity of enterprises and organizations, the deterioration of their financial performance. We incur large losses in taxes and fees in the first year of 2022, but we will lose especially much in 2023 due to a significant reduction in the export of oil, gas and coal. And also metals. These are the main groups of goods that provide budget revenue.
- The day before, the Central Bank presented three possible options for how events will develop. According to the baseline scenario, the regulator expects that in 2022 the decline in GDP can be expected at the level of -4%-6%.
-Perhaps it will. Because the first quarter was generally positive. And this improves the overall economic performance in general for the calendar year 2022.
- And how long will it last?
-I think it is realistic to restore the economy by 2025. Not only me, but many others, the term for economic recovery is 2025. But in order to restore real incomes, final consumption, and the volume of retail trade, it would be good to do this by 2026-2027.
- And if you compare it in general - from the current moment to the history of the new Russia, which recently turned 30 years old. Will we have enough stock of those fat years?
-For 1991-2021, Russia's gross domestic product increased by only 15%. While the GDP of the European Union has grown by one and a half times, the US has doubled. The post-socialist countries of Europe - the new members of the EU - by 2.5-3 times, and developing countries led by China, India and Brazil from 3 to 5 times. In China alone, it has grown sevenfold.
But fundamental changes have taken place in the composition of the gross domestic product. The share of fixed capital accumulation has almost halved - from 40% in Soviet times, it fell to about 20%. And the proportion of weapons has decreased even more. Due to this, the share of the consumption fund of the population has significantly increased. Therefore, real incomes grew faster than the expansion of the economy. On average, about 30%.
At the same time, half of the population's real incomes did not increase. But on the other hand, they increased very strongly among the 20% of the most prosperous strata of the population. At the same time, social income inequality has grown catastrophically.
The average per capita income of 10% of the wealthy population exceeded that of 10% of the poor by about 15 times. In Europe, the difference between rich and poor is 10 times less, in Germany - seven times. In the countries of social democratic orientation and post-socialist countries of Europe - six times. And in Japan, even 4.5 times.
In the 1980s in the USSR this difference was three times, and in the 1990s it increased to 4 times.
As for industry, in 30 years it has not reached the level of the Soviet period (96%).
- What are the reasons for such a low growth of our economy?
-Very simple answer: we have created a socio-economic system without a motor. We don't have a capital market.
The engine of the market system is the capital market.
You should be able to take a cheap investment loan within the country and develop. We don't have cheap investment loans. And their share in total investment is 5 times less than in developed countries and three times less than in China and many developing countries. The banking system, which finances economic growth in other countries by three-quarters, has turned away from this in our country.
But banking assets are the main "money bag" of the country. It is three times higher than the consolidated budget of the country. And it is almost equal to the gross domestic product, amounting to 120 trillion rubles. Of which only 2 trillion are investment loans of fixed capital from domestic banks.
The stock exchange in our country mainly consists of short money, and is semi-speculative, not investment in nature. The country does not have a developed mechanism for the reproduction of "long" money, from which investments are drawn.
In addition, there is no developed competitive environment, which is the most important incentive for economic growth. Conditions have not been created that would interest entrepreneurs to invest more in the development of their country. They transfer a significant part of the funds, as you know, to the accounts of foreign banks and offshore, where, according to the calculations of the Boston Consulting Group, Russian organizations and individuals hold more than $400 billion.
In 2021, Russia had a record high level of income for enterprises and organizations (profit minus loss) - 29 trillion rubles. But invested - in fixed capital, in the wage fund - was a minimum. The main money was distributed to shareholders in the form of dividends and settled on accounts in domestic and foreign banks. And they also went to purchase foreign securities.
- But in 2012, a “May” block of economic decrees was created: 5% annual GDP growth, an increase in real incomes of the population by 4.5% annually, and the creation of millions of skilled jobs.
Yes, and other good indicators. Let me remind you of another important point, the fulfillment of which would guarantee us sustainable economic growth until 2020. This is an increase in the share of investments in fixed assets from 21% in 2011 to 25% in 2015 and 27% in 2018. This implied a transition to an accelerated growth in investments, which were to grow by 40% in 2013-2020.
Everything was done in reverse. Public investment during this period did not increase, but decreased by 31%. And the largest corporations subordinate to the state, headed by Gazprom, Russian Railways, and others, even decreased by 35%.
The Central Bank raised the key rate so much that it became unprofitable to take investment loans and they also collapsed. Their volume also collapsed. And although private investment at the expense of enterprises and organizations increased by 10% over this period, overall investment fell by 11%. And this is what basically caused the transition from the economic recovery in 2010-2012 to the recession that began in 2013.
Misfortune never comes alone. Due to the deterioration of conditions for investment, a massive outflow of capital from Russia began.
From 2008 to 2022 inclusive, a trillion dollars will leave Russia. And the current year will be a record one in terms of capital outflow - 246 billion rubles, this is the forecast of the Central Bank.
In the first quarter of 2022 alone, $64 billion “floated” from Russia - this is as much as it usually took in a year. Foreign companies massively curtailed their business due to sanctions, there are explanations, but the figure is very bad. I must say that in 2014, when sanctions against Russia were first introduced, the outflow amounted to $151.5 billion. This is a huge number.
- But back to ordinary people, to their real incomes. You are talking about business problems, but our minimum wage is 13,000 rubles.
-I would say that the main task of the country is to restore as soon as possible, and then pull up the well-being of people and, above all, their income and consumption. Raise real incomes by 20% to restore their level, which is at least 15 trillion rubles. This requires drastic measures. Experts propose to raise the minimum wage from 13 to 30 thousand rubles. Raise the average pension from 16,000 to 30,000 rubles , giving people the right to receive slightly reduced pensions at the age of 55-60, as it was before.
And we also need to triple the unemployment benefit, the average amount of which in Russia, perhaps the only country, is three times lower than the subsistence level.
To exempt from taxes 30 thousandth income per month . The most difficult thing is to raise incomes in the countryside, in rural areas and in small towns where 50 million people live. And their per capita income is 20-25 thousand rubles a month, compared with 40 thousand rubles on average in the country and 45-50 thousand rubles in big cities.
The state does not have such funds, and therefore it is necessary to create conditions for the working population in the countryside and in small towns to earn money on their own. Why is it necessary to significantly increase the number of farming peasant farms, to unite them into industrial cooperation, in which it is necessary to create thousands and thousands of plants for processing agricultural products and servicing farmers. As well as its own network of food stores throughout the country - COOP, as is the case in Switzerland and many other countries.
- In addition to increasing social support measures, what other resuscitation measures should the Cabinet of Ministers take, in your opinion?
-To turn the banking system towards solving the problem of socio-economic growth and, I repeat, the improvement of people's well-being. Our state, whose debt to other countries is one of the lowest in the world, to increase it. For external debt, for example, from 3 to 15% to 20% of GDP in the next 5 years. I note that the debt of European countries is 80%, the USA - 110%, China 67%, and Japan even 266%.
And it is necessary to interest enterprises in increasing investment in fixed and human capital, for which purpose exempt from income tax that part of the profit from which they are scooped. If we reduce the depreciation period by at least one and a half times, then we can increase the depreciation fund, from which more than half of the investments of enterprises and organizations are formed.
And the last thing that I cannot talk about in detail and in detail, without being a specialist, is a radical improvement in the activities of the courts in relation to business. And the strictest measures to prevent the intervention of law enforcement agencies in the socio-economic development of the country.
- And now, today, due to what our economy can grow? We don't have anything. Without imported components, we cannot create our own aircraft, produce a competitive car. We don't even have our own Russian iPhone.
On the one hand, we have nothing, on the other, we have almost everything. We are an amazing country.
I will add that the mechanism that moves the economy forward consists not only of the capital market, but also of the competitive environment and the conditions under which businesses are interested in investing in their country.
And the second mechanism for development is planning. Strategic, five-year, which was used and is being used by 50 market countries.
- And we abandoned this practice after the collapse of the USSR.
Yes, we threw the baby out with the water. India completed its 12th Five Year Plan a few years ago, Turkey is now in the middle of its 11th Five Year Plan. Japan had six five-year plans, thanks to which it became the second power after the United States.
This is not, of course, about such an administrative, centralized, detailed planning that is mandatory for everyone. We are talking about the modernization of the system in relation to the market. For state-owned enterprises, this is a directive plan, for private enterprises it is indicative. That is, to consult with private business - we would like this, and this. And by agreement, a figure is set for which the entire state mechanism works. And it helps private businesses reach some indicators.
Will oil and gas remain the main sources of income?
- The entire fuel and energy complex, without coal, brings only 15% of income to the budget. But this is without petrochemistry and oil refining, without related industries, without investments in the fuel and energy complex, without the share of transport, without estimates of financial flows. Really, the share of 25%, if rough.
Oil, if all the sanctions work, will no longer be the engine of our economy. Since 1999, there has been an eightfold increase in the cost of oil per barrel. This will not happen again.
The fuel and energy complex will continue to play a large role in our economy, its share in GDP will remain high, but less and less, which is why other industries need to be developed.
-And if it fails to develop, then default?
- No, we counteract and mobilize internal resources, which, as I said, are huge. To do this, you just need to do natural and reasonable things. For example, I repeat once again, turn the banking system into problems of socio-economic growth.
And we need to accept the program, we live without a program and a plan. And we need to develop a program to restore the economy by the end of 2025. And for this it would be good to gather experts. Not only among government officials, who often do not have an economic education.
Not to do something out of fear - to raise the key rate to 20%, but to analyze and plan.
-And it was not necessary to raise up to 20%.
-I think no. Raise to about 12%. Now it has been dropped several times.
- In your forecasts, you specified: the crisis will stretch until 2025-2026, but this is if the SVO stops. What if it doesn't stop? And how critical are the costs of this special operation for the federal budget?
- I will not predict the timing of this special operation. This is not my area of expertise.
So far, every day the SVO costs the budget about $1 billion. The budget sank a lot, but not critical, if we talk about this indicator. Some experts believe that by all indications, a truce is possible before the end of the year. This is not my prediction. If this happens, then I believe that part of the sanctions against Russia will be lifted. For now, let's look to the future based on such a scenario.