Cost of political risks is 75,9 billion USD and 7,1 billion RUR – FBK experts
On February 1, 2012 a regular meeting of FBK Economic Club “Economic Cost of Political Risks” (In Russian) was held in Moscow. The experts tried to estimate political risks in Russia and provided political and economic forecasts for the near future.
When opening the meeting Igor Nikolaev, Director of FBK Strategic Analysis Department noted that the modern speculative economy model is very sensitive to the factors able to affect dynamics of securities market, flow of funds showings, investment activity etc. After the elections to State Duma on December 4, 2011 political risks became one of such factors. They had impact on capitalization of Russian securities market. FBK on the basis of data of the World Federation of Exchanges calculated decreasing capitalization of Russian securities market in December 2011 which made 75,9 billion USD (decreasing capitalization of Russian national stock exchange – MICEX. Capitalization dropped down by 9%. (For reference: in December 2011 change of dynamics of the main world national stock exchanges on the whole was diversified: NYSE Euronext – 5% rise, Tokyo SE Group - 1,2% rise while NASDAQ OMX – 0,3% drop, the same as London SE Group – 1,1% drop etc.).
“Economic cost of the emerged economic risks isn’t caused by drop of capitalization of Russian securities market. It is rightful to question efficiency of unused 7,1 billion RUR assigned in 2011 for financing State Duma elections from the Federal Budget”, Igor Nikolaev believes. At the same time indirect effect of political risks on economy, according to the expert, “may be much worse”. Here goes continuous capital outflow and much more.
Vladislav Inozemtsev, Director of Center for Research of Post-Industrial Society believes that the securities market reacted with fundamental slump, first of all, not to public protests in Russia but to the confirmation that the same people will remain in power. “The point is that today the authorities withdrew from the idea of their legitimization, even just semblable”, the expert believes. According to him, the time of tough state economy is to start immediately while inevitable drop of oil prices will prompt it. “Further on “hand management” methods and ignoring laws will strengthen, so economic growth will die out faster”, Vladislav Inozemtsev forecasts.
Igor Yurgens, Chairman of the Management Board of the Institute for Contemporary Development believes that two possible scenarios of economic development of Russia exist. According to pessimistic forecast, the authorities haven’t learned any lesson, so then, according to Igor Yurgens, in two years “economics will smash the wall at 140 km/h”. Another scenario is optimistic: “Neatly “cutting up” military expenses, literate privatization of state property, maintaining transparency at all stages of authorities etc could help Russia to keep development tempo at the level of BRICS”. It’s still unclear which way the authorities choose, Igor Yurgens noted.
Mark Urnov, Chairman of Expertise foundation, Scientific Tutor at the Applied Economics Department of Higher School of Economics believes that “profound economic reforms could happen if public opinion and elites backed up the authorities”. “However they don’t, because according to authorities the most important now is “not to heave the waves”, so that to hold on, the expert explains. Consequently Mark Urnov forecasts economic and political crisis in Russia in the near years.
Anders Aslund, Senior Fellow at the Washington-based Peterson Institute believes that future of Russia seems to be rather attractive. He reminded that economic performance of the country is really impressive: “Such good macroeconomic situation has never existed before”. Moreover Russia has great human potential: young people the most of them with higher education, increasing life span, decreasing infant mortality etc. “There is one big problem in Russia – corruption. Only Kenya overcomes Russia in terms of this showing”, Aslund believes. “It’s clear that Russia is rich with oil and authoritative traditions are strong here. However it’s not OK that we have to compare Russia with such countries”, the expert concluded.