ALEXEI VEDEV: “THE GOVERNMENT HAS CHOSEN THE RIGHT PATH TO DEVELOP THE RUSSIAN ECONOMY”
In his address to Russian senators, Andrei Belousov, First Vice Premier spoke about contraction of the Russian economy on the back of sanctions imposed against the Russian Federation and announced the government’s support measures. In his interview to the МК daily, Alexei Vedev, Head of the Financial Studies Department of the Gaidar Institute, noted that the Government had chosen the correct path aimed at facilitating the financial stability of the Russian economy.
The contraction of the Russian economy caused by western sanctions has already begun and varies from 9% to 11%, Vice Premier Andrei Belousov declared in the Council of Federation. The main challenge is the contraction of the economy on the back of logistics restrictions and liquidity shortages. According to surveys of executive officers, industry and commerce saw a 11% decrease in their output volumes, while other sectors, a decrease of 9%-10%; it is noteworthy that the labor market remained virtually unaffected.
According to him, western sanctions are aimed at isolating Russia from the global economy, thus initiating the processes of degradation and disintegration of the Russian economic system. At present, the Government’s agenda is focused on measures to “eliminate the shock, prevent the panic and ensure functioning of key economic agents.”
To underpin the economy, Russia is developing new import substitution programs which involve nearly 6 million companies. Further, according to the speaker, most foreign companies operating in Russia do not intend to exit this market. By Andrei Belousov’s estimates, the Government is prepared to spend Rb7-8 trillion on supporting backbone enterprises and medium-size companies.
“For the first time in the past 10-15 years, the authorities have turned to the monetary stimulus agenda. During the 2015 crisis, this mechanism was not given consideration to. At present, the Government is departing from the surplus budget and returns the earlier withdrawn funds to the economy,” Alexei Vedev said.
“In principle, Rb7-8 trillion is a good “base” sum, which is equal to 5%-6% of GDP (in 2022 GDP is projected to amount to Rb120-125 trillion) and can later be revised upwards. Broadly speaking, it is loans extended by state-owned banks, as well as funding out of the National Welfare Fund. At year-end, the economy is highly likely to fall by 10%-11%, but nobody can say at the moment what the actual extent of slump is going to be like,” Alexei Vedev believes.
According to him, western sanctions are aimed at isolating Russia from the global economy, thus initiating the processes of degradation and disintegration of the Russian economic system. At present, the Government’s agenda is focused on measures to “eliminate the shock, prevent the panic and ensure functioning of key economic agents.”
To underpin the economy, Russia is developing new import substitution programs which involve nearly 6 million companies. Further, according to the speaker, most foreign companies operating in Russia do not intend to exit this market. By Andrei Belousov’s estimates, the Government is prepared to spend Rb7-8 trillion on supporting backbone enterprises and medium-size companies.
“For the first time in the past 10-15 years, the authorities have turned to the monetary stimulus agenda. During the 2015 crisis, this mechanism was not given consideration to. At present, the Government is departing from the surplus budget and returns the earlier withdrawn funds to the economy,” Alexei Vedev said.
“In principle, Rb7-8 trillion is a good “base” sum, which is equal to 5%-6% of GDP (in 2022 GDP is projected to amount to Rb120-125 trillion) and can later be revised upwards. Broadly speaking, it is loans extended by state-owned banks, as well as funding out of the National Welfare Fund. At year-end, the economy is highly likely to fall by 10%-11%, but nobody can say at the moment what the actual extent of slump is going to be like,” Alexei Vedev believes.