Experts predict an economic crisis in Russia

Russia's economic growth slowed down; in August, GDP grew by only 1%. Next year, the government predicts weak growth. Prime Minister Dmitry Medvedev admits that the next six years will not be easy. But promises in the future growth of real incomes and the acceleration of the economy. Experts agree that 2019 will prove difficult year, and believe that the economy is already on the way to recession, writes “Newspaper.ru".

Фото: Depositphotos

The next six-year cycle in the Russian economy will not be easy, Prime Minister Dmitry Medvedev said at a government meeting on Thursday. 2019 will be an adaptation year - a new package of structural changes will bring the economy to a higher growth trajectory, the chairman of the government said.

“We have to take into account the situation in the commodity and financial markets, as well as the possible expansion of trade wars and the strengthening of protectionism and sanctions pressure,” Medvedev warned.

According to him, Russia will build its economic policy in such a way as to “develop confidently even in such not quite favorable conditions.”

At the same time, the prime minister promised "to ensure a steady increase in living standards." He predicted that on average inflation should remain within the target of about 4%.

Meanwhile, the real disposable money incomes of the population of Russia in August decreased by 0,9% on an annualized basis. This year is the first fall. In general, in January-August, revenues increased by 2,2%.

Tatyana Maleva, director of the Institute of Social Analysis and Forecasting at the RANEPA, who presented the regular monitoring of the socio-economic situation of the country's population to 20 on September, says that it is not worthwhile to dramatize the August data, but there is nothing to be happy either.

Revenues are de facto falling or not growing, despite a significant increase in salaries. This is explained by the fact that at the same time salaries are reduced in the non-observed statistics sector. In addition, she notes a weak increase in pensions. Their size remains insignificant, one and a half subsistence minimum.

Next year, due to the increase in VAT from 18% to 20% and the acceleration of inflation, there is a risk that real incomes will again become negative, noted BKS chief economist Vladimir Tikhomirov.

Dmitry Medvedev also noted that, according to the expectations of the Ministry of Economic Development, starting from 2021, the annual economic growth rate will exceed 3%.

“First of all, due to industries where there is a good export potential, these are chemical and food industries, mechanical engineering, as well as through infrastructure development and housing construction,” the prime minister explained.

So far, the growth rate of the Russian economy leaves no room for optimism. In August, GDP growth slowed to 1% from 1,8% a month earlier. August was the worst month this year. However, in January-August, the economy still grew by 1,6%.

The main contribution to the slowdown in August growth was made by a sharp deterioration in the annual dynamics of agriculture - minus 10,8% after a slight increase in June-July.

"The decline in agricultural output in August was due to the negative dynamics of crop production due to lower yields and a decrease in the acreage of a number of crops compared to 2017," says the Economic Activity Picture, published by 20 September, in a report from the Ministry of Economic Development.

The growth was also slowed by freight turnover (up to 2,5% after 4,1% in July) and industrial production (up to 2,7% after 3,9% in July). Stagnation is still observed in construction (-0,8% in August after -0,7% in July).

The growth rate of retail sales in August slightly increased compared with July (2,8% and 2,7%, respectively).

“On the way to recession,” ex-head of the macroeconomic forecasting department of the Ministry of Economic Development and Trade, director of the analytical department of Loko-Invest Kirill Tremasov, commented on this data on his Facebook page.

According to him, the August statistics is perhaps the weakest monthly report of Rosstat this year, he said.

But at the government meeting, the head of the Ministry of Economic Development and Trade, Maxim Oreshkin, showed optimism.

“In the current year as a whole, we expect the economy to show growth at 1,8% and inflation will end the year at 3,4%, including due to the fact that the ruble’s dynamics to the currencies of our trading partners, such as Turkey or China, looks significantly better than the dollar, ”he said.

Oreshkin also says that next year will be in many ways transitional, with a difficult first quarter. This is due to the increase in VAT from January 1, and "the active phase of the implementation of national projects will begin closer to the middle of the year." Also, according to the Ministry of Economic Development, the maximum slowdown in credit activity caused by volatility in financial markets will be in the first quarter.

In 2019, growth will slow to 1,3%, and inflation will accelerate to 4,3%, with a peak around 5% in the first quarter.

But, starting with 2020, “the restoration of economic growth will be based on the results of ongoing reforms and the successful implementation of national projects.” Economic growth will accelerate to 2% in the 2020 year, and further consolidate above the 3% mark, detailed the words of the premier Maxim Oreshkin.

Inflation stabilizes near the target value of 4%, the growth of income and wages in real terms will be 2 – 3% per year.

Oreshkin believes that “factors easing the demographic impact on the economy” due to the increase in the length of active life, the positive dynamics of migration inflows and the increase in the retirement age are factors that will disperse the economy.

The second factor is improving the quality and volume of investment activity to the level of 25% of GDP. The third is the acceleration of productivity growth and digitalization.

That is, the next two years in Russia will be characterized by weak economic growth and real incomes of the population. And in the 2020 year, according to forecasts of Western analysts, the next global financial crisis may begin, and Russia is unlikely to remain aloof from this process.

Read also on ForumDaily:

How long do they get an American visa in Russia?

The Atlantic: Russia recruits neo-Nazis, radicals and bikers for sabotage in the US and Europe

How Russian bankers are preparing for new US 'sanctions from hell'

Do you want more important and interesting news about life in the USA and immigration to America? — support us donate! Also subscribe to our page Facebook. Select the “Priority in display” option and read us first. Also, don't forget to subscribe to our РєР ° РЅР ° Р »РІ Telegram  and Instagram- there is a lot of interesting things there. And join thousands of readers ForumDaily New York — there you will find a lot of interesting and positive information about life in the metropolis.