FBK Economic Club Experts Discuss Prospects of Russian Economy

FBK Economic Club Experts have discussed prospects for the development of the Russian economy and the potential for its growth under the conditions of strengthening sanctions.

In his opening speech, Igor Nikolaev, the Director of FBK Strategic Analysis Institute, mentioned four factors which would have the biggest impact on our economy in the nearest future. First of all, it is the current economic climate, which already shows a tendency to cessation of growth. The second factor is the exchange of sanctions. Western sanctions multiplied by our “tit-for-tat responses” will slow down the development of the Russian economy. The potential for the growth in oil prices being the main driver of our economy is also limited. Inevitable reforms, according to Igor Nikolaev, will be inefficient under the above conditions and will not allow significant growth.

“I believe that it will be impossible to reach the planned GDP growth of 2.1%. This year, in the best case scenario, the growth will be about 0% and then, if nothing changes, we have a chance to face a decline,” the expert says.

Evsey Gurvich, the Head of the Economic Expert Group, added that the economic development had very low priority for all social groups in the country. Development in the nearest years will be connected to the response to new restrictions or to anticipatory defence against possible sanctions (such as, for instance, creation of the Mir bank card). But the vast majority of efforts and resources will be spent to support economic and social stability and to be successful in the geopolitical struggle.

“In the nearest future I do not see any serious drivers for the growth, which will be gradually slowing to 1 or 1.5% at best. At the same time, Russia's involvement in the global economy will decrease, which is not a productive approach,” Evsey Gurvich says.

Vasiliy Solodkov, the Director of the HSE Banking Institute, spoke about the financial environment and underlined that for “the six years of victories” the banking system had decreased twofold. It was, in particular, caused by such worldwide trends as the decrease in deposit rates and origination of realistic alternatives to the banking sector. In the Russian environment such trends also included the policy of the Central Bank aimed at cleaning up the banking system.

“As a result, in order to save their money business owners leave for state banks where license revocation is unlikely. But experience has shown that the government is the most ineffective investor,” Vasiliy Solodkov summed up.

FBK Economic Club is a unique discussion platform where journalists can meet well-known economists, politicians and public officials in order to discuss a wide variety of economic issues.