Economist Nikolaev reproached the Central Bank for being too optimistic

In its quarterly report on the results of the first quarter of this year, the Central Bank proposed to introduce a new strategy to stabilize the economy for the next two years. The main thesis of the report was the conclusion of the regulator that the record capacity utilization of the industry, laid down in 2022, has exhausted itself. In 2023, consumer demand should become the locomotive of economic growth.

In the monetary policy report, the regulator notes that inflation in the country is currently at a low level due to the high base effect in March-April 2022. In the II quarter consumer price growth is projected at the level of 3.6%. But this dynamic will not last forever. Already in the coming weeks, inflation will begin to slowly but surely creep up and by December it will reach 4.5-6.5% in annual terms.

The current low level of inflation has a very real economic basis. This, as domestic financial experts have repeatedly said, is the “high base effect”. But there are other factors holding back the rapid rise in prices: last year’s high grain harvest, which eases price pressure on the food market. In addition, significant stocks for a number of commodity groups play a certain role.

The utilization of industrial capacities in 2022, indeed, became a record for the entire observation period – 80.2%. GDP growth in the II quarter is expected at 4.2% after a peak fall a year ago. As they say, all the sanctions out of spite. In order to stably fix inflation next year at the level of 4%, the Central Bank does not rule out an increase in the key rate in its baseline scenario. In 2023 – up to the level of 7.3-8.2%, and in a year – up to 6.5-7.5%.

Russians, of course, are more interested not in macroeconomic indicators, but in store prices. The quarterly report of the regulator gives an answer to this question, which, however, is unlikely to console buyers. Current price growth rates. in annual terms will begin to pick up speed amid sustained inflationary pressures. And the main driver of this acceleration will be an increase in consumer demand. This indicator is called the main pro-inflationary factor. In general, the eternal battle (with prices), we can only dream of peace.

Against the backdrop of general discussions about the strategy to stabilize the Russian economy for the next two years, the regulator’s forecast for an increase in consumer demand this year, which, as you know, is directly related to the real incomes of the population, raises some doubts. In recent years, they have fallen sharply.

Even today it is difficult to understand whether incomes have increased or decreased. For example, let’s take as an index (like the index of Russian salad before the New Year) a recent study on alcohol consumption by Russians over the past May holidays. They show that incomes are declining rather than rising. Vodka for the May celebrations was bought 25% less than a year ago; wine by 33% and cider by 35%. At the same time, it should be taken into account that May dates are sacred for Russians, and no one always spares money during their celebration.

Which way will we go further in stabilizing the economy?

– Not only the Central Bank, but also the government makes a bet on increasing the consumer demand of Russians in their forecasts, – says Igor Nikolaev, chief researcher at the Institute of Economics of the Russian Academy of Sciences. – Officials consider this factor as the main driver that will “pull” our economy out of the abyss. The bet on this indicator is correct. However, there are no prerequisites for such a development of events yet.

Judge for yourself. Last year, the real disposable income of the population decreased by 1%. A noticeable drop occurred in another important indicator – retail trade turnover, which shrank by 6.7%.

– Maybe the first quarter of this year showed an optimistic trend?

– Indeed, there has been an increase in real disposable income during this period. But it is quite small: 0.1% in annual terms. Trade in the first quarter still shows a decrease in turnover – by 7.1%. At such values, the main indicators of consumer demand, it is difficult to hope that there will be a consumer boom, which, like a lifeline, will support the economy.

– And what kind of income growth should Russians have in order for there to be a surge in consumer demand?

– For this indicator to become a driver, an engine, we need not tenths of a percent, as we recorded in the first quarter. Income should grow by 4-5 percent or more. Let me remind you that on the eve of the 2008 crisis, when our economy was growing dynamically, the population’s real disposable income increased by 10-12%. Now one can only dream of such figures.

– The Central Bank does not rule out raising the key rate this year in order to reach 4% inflation in 2024…

– The key rate is important in the fight against inflation. And yet the Central Bank overestimates its importance. Our economy is still unstable and depends on many factors. Inflation is influenced by the exchange rate of the ruble, and the fact that the economy as a whole is developing. By raising the key rate, we will be able to keep inflation within the “decency limits” and not reach a double-digit rate. However, 4%, in my opinion, is too optimistic a forecast.