FBK Club of Experts’ Economic Forecast for 2015
Date of publication
03.03.2015Igor Nikolaev, FBK Institute of Strategic Analysis Director, analyzed in his report the figures of the Ministry of Economic Development and gave his assessment of the current economic situation. According to the expert, the drop of GDP by 4% should be expected. He noted that such a driver as the economic demand is not effective any more. The retail trade turnover that used to support the economy shows a serious negative dynamics today. According to Nikolaev’s projection, the inflation rate will amount to 18%, and the average annual dollar rate will fluctuate at about 75 roubles. However, the rouble can face another wave of collapse. That is first of all connected with the oil prices, which will stay at a pretty low level of $50-60 per barrel.
At the same time, the economist was optimistic about the investment in the real estate that would be provided with the budget money.
Summing it up, Igor Nikolaev pointed out that in terms of macroeconomic indicators that year would be recessionary for sure. “Unfortunately, that will hardly be limited to 2015 alone,” he added.
Natalia Akindinova, the Higher School of Economics, Development Center Director, said that the recession might last for more than a year. “It will be difficult to get out of the spiral of the reduced demand, production and income without overcoming the institutional problems. And so far there is no visible trend of it. Evidently the sequestration of the budget will be planned. The recession will continue at least for the next two years, 2015-2016”, the expert believes.
Maria Kazakova, heading the Laboratory for Economic Development under the Gaidar Institute for Economic Policy, believes that it is the structural but not the geopolitical factors that played the key role in the current recession: “The measures prescribed by the anti-crisis plan may lead to our emerging from the recession in 2016-2017 with a zero growth, and probably feebly positive, but the fundamental factors associated with the growth of efficiency draw GDP growth rate down to the negative field. As to the future, we see no prospects for improvement in relation to the institutes and fundamental factors”. The expert also noted that there were no prerequisites for withdrawing from the recession in Q3-4 of that year. In order to get at least to the world average level of growth of 3% the Russian economy will need to increase the work force by 1 million people per year for three years. And the annual growth of investments by 3-4%. “Unfortunately, this is not discussed yet. All the factors are indicative of the decline. I am not going to estimate whether we have reached the bottom or not, but in my perception 7% of decline is not an excessively pessimistic estimate,” said M. Kazakova.
The opinion was summarized by Sergey Dubinin, Chairman of VTB Supervisory Board, VTB-Capital Board member. He thinks that today the Russian economy in many aspects is “playing on the previous crisis”, as no relevant structural transformation was made after it. And the outer factors only enhanced the existing negative trends.
Analyzing the situation in the banking sector, the expert noted that the main share of Bank capital, more than 80%, is concentrated in the 50 largest Russian banks and all other lending institutions account for less than 20%. This distribution reduces the efficiency of small banks, limits their abilities but, in general, the situation is not alarmingly serious, since the banking sector of Russia holds far fewer assets than, for example, the United States; in this regard, the crisis in the banking sector will not have a significant impact on the economy.
Speaking about the macroeconomic situation in general, Sergei Dubinin said that the Russian budget will be deficit-ridden. This is due to the fact that it is planned to keep the amount of funding for several directions at the time, in particular, spending on the defense and security, and the current volume of social costs will remain.
Sergei Dubinin also expressed his opinion about the prospects of investments in the Russian economy. According to the expert, due to the current situation the reliance of institutional investors, both foreign and Russian, on investments in the Russian economy declined slightly. However, in his opinion, there are no reasons for panic forecasts. The portfolio investors may remain to be interested in the invest of money. "The recovery in the business climate will take a long time, but one must accept that, that is the situation today," he said in conclusion.
FBK Economic Club is a unique discussion platform, which gives an opportunity to the representatives of mass media to meet with prominent economists, politicians, and officials for professional discussions of a wide range of economic issues. Within the framework of the Club FBK presents its analytical reports.
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