The Experts of FBK Economic Club on the Economic Revival in Russia

At the meeting of the FBK Economic Club on May 19, 2015, the leading Russian experts assessed the prospects for recovery of the national economy and its segments.
According to most of them, the stable growth in the near future will be impeded by a number of factors some part of which has nothing to do with the external conditions and the sanctions.
The experts of the Economic Club pointed out that the crisis was getting protracted and might linger on from four to five years.



Igor Nikolaev, FBK Institute of Strategic Analysis Director, stated in his report (in Russian) that despite the improvement of some economic indicators, such as the exchange rate of the national currency, the prices for energy resources and the growth of production in some segments of the economy, the situation in general remains alarming. The GDP in Russia in the first quarter of the current year decreased by 1.9% as compared with the same period last year. In a similar way the inflation grew by more than 16%, the volumes of export, import, trade decreased, the investments to fixed capital fell, the real wages came down significantly (by more than 8%).
In the opinion of Igor Nikolaev, the forecast by policy makers of the Government economic block for the economy to come back to the pre-crisis level within one and a half or two years were overoptimistic.
“In order for the Russian economy to grow at a rate higher than the worldwide there should be a combination of several factors of which the following three we deem the basic: the rise in global oil prices up to 100 - 120 dollars per barrel, fast and effective structural reforms, the lifting of sanctions. None of these is in sight in the nearest future,” added the economist.

Oleg Buklemishev, Head of the Center for Economic Policy under the MSU School of Economics, drew the attention of the club members to the decline in the investment activity. He thinks there are good reasons to believe that we are talking of the investment crisis. Given that the investments have an effect on the situation not only in the coming years but also in a remote prospect, he thinks the Government offers no measures to control the dramatic drop in investments. “The underinvestment of today is a measure of our lagging behind tomorrow,” said O. Buklemishev.

Evgeny Gontmakher, Deputy Director of the Institute of World Economy and International Relations (IMEMO RAN) elaborated in his speech on how the economic crisis affected the social sphere. He pointed out a whole range of negative factors, including the increase of “bad” jobs with low wages and low level of technical equipment, deprofessionalization, as well as, according to the report of the Accounting Chamber, the impairment of availability and quality of medical and educational services in several regions.
The expert believes that deterioration of the quality of life is connected with objective circumstances induced by the crisis: the returns from income tax and PIT to the budgets of all levels are going down, there is a flow of small and medium-size business to the shadow sphere, and moreover, the number of employable population is shrinking. In the next 2-3 years the impact of the negative factors might be mitigated at the expense of available reserves, and in the long term more radical measures are required.

Marina Krasilnikova, the Levada Center head of the Income and Consumption Unit, told the audience how the changes in the economic and social spheres are perceived in the country. According to her, the people feel that the previous recession – the crisis of 2008 – is not over yet. The opinion polls conducted by the Levada Center show that neither the index of social nor the index of consumer sentiment have come back to the level before Y2008.
People believe the prices will rise and the number of unemployed will grow, too. In terms of economics such sentiments are expressed through the lack of willingness to make major purchases, to invest, to borrow.
At the same time, Marina Krasilnikova emphasized the growing confidence of people in the future for the last several months. She deems the trend was generated by the topical agenda, but if the social expectations of people are not supported very shortly with the improvements in the economic situation the trend may fairly rapidly change to the opposite as the social changes are much more dynamical than the economic ones.

FBK Economic Club is a unique discussion platform, which provides an opportunity for the representatives of mass media to meet with prominent economists, politicians and officials to discuss a wide range of economic issues. Under the Club FBK also makes the presentations of analytical reports of the company.

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