Demand is not enough even for supply

Demand is not enough even for supply



Updated data on GDP statistics in the second quarter show that the nature of the current apparent economic stability is the coincidence of both the recession and demand and supply, mutually balancing each other. GDP in the second quarter, according to new Rosstat estimates, decreased by 4.1%, while, according to the Bank of Russia, supply and demand shocks continued in July-August, and the situation developed, probably in the direction of a general decline - it was expected in the summer , but it may well be delayed.

Rosstat slightly (by 0.1 percentage points) increased its estimate of the contraction of the economy in the second quarter of 2022 to 4.1% in annual terms, having published its data on GDP production. Preliminary estimates made on the basis of industry statistics published earlier (see Kommersant of September 6) coincide with the data of statisticians. Industry is responsible for some worsening of statisticians’ assessments, but wholesale trade became the leader of the fall in the second quarter (the share of value added of all trade in GDP is the highest among sectors – 14.5%), while processing and transport closed the top three anti-leaders with comparable rates of annual decline. “It is in this sector that the bulk of the gross value added (GVA) of the gas industry sits (gas trade in GVA accounts for more than its production, this contradicts economic sense, but this is how our statistics are arranged),” the authors of the Telegram channel note MMI.

At the same time, the Bank of Russia published detailed sectoral comments based on its regional research. “The nature of the current downturn in economic activity varies considerably at the sectoral level. In the export-oriented sectors, there was a downward trend in external demand, as a result of which the slowdown in output growth was combined with a slowdown in the growth in product prices. In sectors that actively use imports for the production of goods and services, a decrease in supply prevailed, due to which, along with a decrease in output growth rates, an increase in the price growth rate was observed, ”the regulator explains in a September commentary on the regional economy.

Monitoring of financial flows by the Central Bank, as well as other leading indicators, indicates a downward turn in the economy after a short stabilization in the second quarter.

The volume of incoming payments (weighted by the share of sectors in GDP) that passed through the Bank of Russia payment system decreased by 1% in August 2022 compared to the average level in the second quarter, and outgoing payments — by 5.4%, respectively. Excluding oil production and state administration, incoming payments decreased by 2.5%. “Operational indicators show output remaining below 2021 levels in the third quarter as well. The decline in economic activity is complex and is accompanied by a change in supply and demand," the regulator's analysts conclude, pointing to the effect of the ongoing structural shock.

In turn, analysts of the MMI Telegram channel calculated that the Russian economy has already rolled back more than four years ago: GDP in the second quarter was 0.6% lower than in the second quarter of 2018, but 2.1% higher, than in the same quarter of 2017. Seasonally adjusted in the second quarter compared to the first quarter of 2022, the economy, according to them, decreased by 5.7%, and in the third quarter the decline may slow down to 1-1.5% by the second quarter and accelerate to 5-5%. 5% in annual terms. Against this background, the September macroeconomic consensus forecasts of FocusEconomics (see Kommersant dated September 8) and the Central Bank have been improved for the current year and worsened for 2023 - a pool of Bank of Russia analysts agree that the economy in 2022 will shrink by 4.2% against 6% previously expected.

Meanwhile, economists from the Research and Forecasting Department (RDI) of the Central Bank noted earlier that the rebound in economic activity at the end of the second quarter is largely due to unfulfilled expectations of an unprecedented collapse of the economy this year and its rapid recovery in the foreseeable future (see Kommersant on September 9) . If the first is quite obvious, then the second is not at all, and expectations this fall may worsen noticeably. In addition to the developments in Ukraine, the current inflation dynamics point to the fading of deflationary trends in August. Commenting on the macro-consensus forecast of the Central Bank, analysts of the Telegram-channel "Solid Numbers" notice that estimates for the next year at the key rate (6.8%) do not take into account pro-inflationary risks that arise with the growth of budget spending in 2022-2023 - by 20% in this and at a rate higher than inflation in the following years. They were also previously warned in the Central Bank's DIP, while the increase in spending, apparently, should create demand greater than the potential drop in private demand, even in negative scenarios for the development of the situation in the Russian economy.

Judging by the estimates of the main indicators of the balance of payments in January-August 2022, foreign trade and current account surpluses, although they remain high, have clearly reversed the trend. “Given the deteriorating situation in the commodity markets, increasing restrictions (the ban on coal exports to the EU from August 10), as well as the voluntary withdrawal from the EU gas market, we can expect a further reduction in exports from the Russian Federation. At the same time, imports are gradually recovering (especially consumer goods). Such dynamics of exports and imports will lead to a decrease in the foreign trade surplus. Until the end of the year it will be impressive. And then everything depends on how the 6th package of EU sanctions works,” analysts of the MMI Telegram channel argue. On Sunday, September 11, Energy Minister Nikolai Shulginov said that the Russian Federation would definitely not sell oil and gas at a loss or below cost if the G7 countries introduce a price ceiling for them. “The trade balance is now the main factor influencing the ruble (and keeping the GDP dynamics from failure.— "b"). And if the balance collapses, then the devaluation to 70-75 (which many are waiting for) will not be limited, ”conclude the authors of the MMI Telegram channel.

Alexey Shapovalov



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