Employees of Gaidar Institute Presented the Latest Issue of the Monitoring of Russia’s Economic Outlook

Vladimir Mau, Rector of the RANEPA, Sergei Drobyshevsky, Academic Director of Gaidar Institute and Mikhail Khromov, Head of the Financial Research Department spoke about research, as well as trends and changes in the Russian economy.

The Online Monitoring is prepared by a team of experts of the Gaidar Institute for Economic Policy (Gaidar Institute), the Russian Presidential Academy of National Economy and Public Administration (RANEPA), the Russian Foreign Trade Academy (RFTA) of the Ministry of Economic Development of the Russian Federation and in partnership with the Association of Innovative Regions of Russia (AIRR).

According to Vladimir Mau, the current economic crisis in Russia is somewhat different from cyclic crises in developing countries. Russia is experiencing a structural crisis which requires from the monetary and economic authorities development of mechanisms to deal with structural imbalances in the economy. According to Vladimir Mau, in the current situation it is more important to perceive the nature of the structural crisis and develop mechanisms which permit to start a recovery process, rather than rely on statistical indices of economic growth rates and try to determine whether the Russian economy has already hit the bottom. Also, Vladimir Mau pointed out that standard guidelines for fast recovery of the economy through stimulation of consumer demand and higher state spendings might be destructive in the long-term prospect. Vladimir Mau reminded that in the 1986–1989 period the USSR government was increasing expenditures to stimulate growth, but that short two-year period of growth gave way to a decade of recession.

In his turn, Sergei Drobyshevsky stressed that Russia was currently experiencing a symbiosis of crises – there was evidence of both structural and cyclic crises – so it was rather difficult to determine correctly whether the economy had already hit the bottom. According to Sergei Drobyshevsky, such assessments will be feasible only in a few of quarters. “It is methodologically incorrect to say that we have passed the lowest point two months ago. At present, it can only be said that the economy has stabilized. The worst is left behind. There are no explicit shocks. But it is premature to say the economy has eventually embarked on the trajectory of growth. For that, more serious changes in the economy are needed,” said Sergei Drobyshevsky. Also, he has pointed out that according to estimates of the Gaidar Institute in the forthcoming two years Russia’s maximum economic growth is in the range of 2%.

Mikhail Khromov pointed out that the situation in the banking sector was still unstable. “It is unfortunate that the policy which is carried out by the Central Bank of Russia coincided with the current crisis. External sanctions, a regulatory pressure and the economic crisis gave rise to an unstable situation in the banking sector. On the basis of the last year’s results, the banking sector showed the lowest profit in the past 10 years. More importantly, the Sberbank accounted for all the profit made by the banking sector as a whole. All other banks aggregately suffered losses. A major factor behind a dramatic drop in profitability of the banking sector was growth in bad debts and the need to make reserves. At present, the situation has somewhat stabilized as the volume of identified “bad” assets did not increase and that factor permitted the banking sector to show a positive financial profit. At the same time, the problem of “bad” assets is still topical and, unfortunately, the regulator has not taken resolute measures so far to solve it,” Mikhail Khromov said.

Video recording of the conference >>>

The mass media:

Experts: Russia’s GDP annual growth rates may amount to 3%-4% // TASS, 03.10.16.

Analysts Declared the Economy Passed the Lowest Point // RBK, 03.10.16.

RANEPA Declared the Russian Economy Passed the Lowest Point // Polit.ru, 03.10.16

Experts Forecast Recovery of the Russian Economy from the Beginning of 2017 // The Federal Agency of Political News, 03.10.16.