At the Fincongress, the Central Bank discussed the invisibility and activity of structural changes in the economy

A year and a half after the start of sharp changes in the terms of foreign trade, the expected future model for the development of the Russian economy has not become any clearer. At the Financial Congress of the Bank of Russia that ended yesterday, the topic of structural changes in the economy was one of the central ones. So far, it has only been possible to record which negative scenarios have not materialized and which alleged threats have been avoided in 2022-2023, but even the exact reasons for this cause discussions among economists.

Short-term and medium-term scenarios for the development of the Russian economy and structural shifts in it were at the center of the second day of discussions at the Central Bank Congress in St. Petersburg – separate panels of the Fincongress were devoted to these topics, which were moderated by Deputy Chairman of the Central Bank Alexei Zabotkin and Head of the Research and Forecasting Department of the Bank of Russia Alexander Morozov , but they have been referred to in many other Fincongress discussions. Interest in structural shifts in the economy, inevitable after March 2022 due to radical changes in the terms of foreign trade of the Russian Federation as a result of the sanctions of the G7 countries as a result of the military operation of the Russian Federation in Ukraine, is primarily due to the fact that so far they are quite poorly visible in the current statistics – as opposed to changing trade flows. This, in particular, was demonstrated by Ilya Voskoboinikov from the Higher School of Economics on July 5 at a Central Bank seminar, from whose calculations it followed that at least now it can be said that in 2022–2023 the Russian economy entered a different trajectory of GDP dynamics compared to the one on which she was at the end of 2020, definitely not.

Meanwhile, at the Fincongress, there was enough evidence that at the micro level, processes, for example, the replacement of the supply of departed medium-sized foreign manufacturers by Russian companies in the domestic market, are proceeding quickly and actively – Anton Danilov-Danilyan from Delovaya Rossiya spoke about this, in particular. Nevertheless, although a year and a half of the external isolation of the Russian Federation from a significant part of the world economy is a sufficient period for the first assumptions about the future new place of Russia in the global division of labor to appear, they are practically non-existent.

At the sessions of the Fincongress yesterday, only “degradation” scenarios were cautiously discussed, which are popular with analysts in 2022, but, at least so far, have not been developed.

Thus, Vladimir Nazarov from the NIFI of the Ministry of Finance quite confidently (and based on the policy of the last year and a half) rejected as long-term risks of “fiscal dominance”, when the volume of budgetary redistribution is so large that it limits the effectiveness of inflation targeting by the Central Bank. At the sessions, predictably, the technology of stabilizing the financial markets of the Central Bank in 2022 and its practical consequences were discussed a lot, but little was said about the impact of the actions of the Bank of Russia on structural changes in the economy. Natalya Zubarevich from Moscow State University in her speech focused on the fact that a significant part of the regional processes in the economy and the labor market do not show signs of structural transformation – it is mainly about the resumption of the “pre-COVID” situation, the reason for which she sees in large-scale budget compensations to the population in 2020 –2022, while, according to her estimates, the development of the situation will largely depend on the economic dynamics of Moscow and million-plus cities, where trends differ from the national ones.

The general explanation for the “ineffectiveness of Western sanctions” (in fact, this thesis was not seriously discussed at the Fincongress – as oversimplified) was successfully formulated by Mikhail Matovnikov from Sberbank: until 2020, the Russian Federation was a net exporter of capital, and because of this, sanctions pressure on it cannot linearly influence the long-term dynamics of GDP – or at least its sign. However, this consideration also hardly implies any indications of a new place for the Russian Federation in the global division of labor and global trade – the only consensus so far is that on the horizon until 2040 there are no grounds to talk about the departure from the rent-based nature of the Russian economy, although the “non-primary” component in it will inevitably grow (if only due to restrictions on commodity exports and the plans of the EU and other countries for energy transition and the introduction of carbon regulation, which, according to most experts at the Fincongress, are overestimated).

In many ways, a rather strange picture – active investments in import substitution at an average level (more precisely, in replacing artificially limited imports with a sharp decrease in competition in the domestic market) without visible traces of major structural shifts in the economy (which would manifest themselves, for example, in structural unemployment and massive investment in the retraining of personnel, increased labor mobility, etc.), apparently a consequence of rather large stocks (including imported intermediate goods) formed in 2020–2021, as well as a decline in consumption in 2021–2023 compared to normal . In this case, the question of in what directions the attempts of a new positioning of the industries of the Russian Federation will be carried out both in the domestic and foreign markets should be asked in 2024-2025. Then, apparently, greater certainty is possible on the question of whether the strict trade embargo of the G7 countries, primarily on the products and technologies of mechanical engineering in the Russian Federation, means the technological degradation of the Russian economy: here the opinions of experts are divided. So far, it is impossible to reasonably give an answer to the question about the competitiveness of Russian players even in the domestic market with mastered mass technologies. The “pinpoint” successes of 2022–2023 obviously do not create a trend here, since right now the theses “almost everything has changed in the Russian economy” and “almost nothing has changed in the Russian economy” look convincing at the same time.

Dmitry Butrin, St. Petersburg