Are clouds gathering over the future of the Russian economy?

On November 8, during her report to the State Duma, Elvira Nabiullina, Chairman of the Central Bank of the Russian Federation, noted that forecasts are now shifting towards a more severe scenario for the development of the situation.

The questions of what caused such a negative “shift of forecasts” of the Central Bank of the Russian Federation and how it could affect the lives of Russians were answered by the participants of the press conference at the DOS — Professor of the National Research University Higher School of Economics, author of textbooks on economics, Doctor of Economics Igor Lipsits and a member of the Presidium of the Stolypin Club , economist Vladislav Zhukovsky.

Such a “shift of forecasts”, according to Professor Igor Lipsits, “is dictated by life itself”, since the domestic economy is already beginning to “crumble”:

“We already see statistics according to which the Russian population is increasingly trying to save money, rather than spend it on purchases. We see a sharp increase in the savings rate. There has never been such a savings rate as it is now: almost 8% of all income. Families urgently set aside savings for a “rainy day”, as everyone realized that this “rainy day” is for a long time. The population has already sharply reduced purchases of non-food items, and it is reducing these purchases to a physiological norm. Perhaps in Moscow this is not so noticeable, since Moscow is a special territory, saturated with money. And in other parts of the country, all this is already very noticeable. But all this will come, of course, to Moscow. The economy begins to “crumble”, and in September we already see a significant decline in performance. (…) The country’s budget is already in deficit, we are starting to increase the public debt. We are starting to pump money out of the economy, which means businesses will shrink and people will be fired.”

As Igor Lipsits noted, the purchasing power of the population began to decline since 2013 (now it has already decreased by 10% compared to the level of 2013), “and when we return to the level of 2013, not a single economist will say now.”

According to another participant in the press conference, economist Vladislav Zhukovsky, speaking in the State Duma, Elvira Nabiullina tried to smooth out sharp corners as much as possible:

“She tried not to talk about the worsening of the crisis. She did not voice the latest statistics for September, namely in September there was a sharp deterioration in the entire macroeconomic dynamics: the decline in industry accelerated to the highest levels since the beginning of 2022 (a decline of 3.1%). She also did not mention that, according to the estimates of the Ministry of Economic Development, the economic recession in September-October accelerated to 5% (this is precisely in terms of GDP), despite the fact that earlier we were promised some kind of stabilization. Of course, we can laugh at some figures for a long time (for example, according to Rosstat, since the beginning of the year, the real disposable income of Russians has fallen by only 1.7%), but, on the other hand, in the third quarter, the rate of decline in the standard of living of Russians amounted to already 3.4%. If we also take into account that inflation in Russia is not 13.7%, but much higher (for example, for consumer goods – 25-30%), then consider that the decline in the standard of living of the population is also much more serious. We also see a decline in retail sales in September to 10% (and this is a very important indicator indicating that people either do not want or cannot spend money). Moreover, the decline in non-food retail reached 15%. (…) Nabiullina herself, speaking in the State Duma, said that the crisis in the Russian economy would last at least another 2 years: this year there will be a decline of 3-3.5%, and next year – by 1-4%. And then, God forbid, we will crawl back by 1.5%, and only in 5-6 years will we, at best, return to the indicators of 2021.”

Of course, it can be said that despite all these “shifts in forecasts towards a tougher scenario”, all these difficulties are, albeit protracted, but still temporary … As the ever-relevant classic of Russian literature Nikolai Nekrasov wrote, “we will withstand everything – wide clear / With our breasts we will pave the way for ourselves. True, after that he adds: “It’s only a pity – to live in this beautiful time / Neither I nor you will have to live.” However, this addition can be attributed to the pessimism inherent in his character and the historically conditioned backwardness of the worldview.

Sergei Ishkov.

Photo by Kirill Zykov