High energy prices will not save the Russian economy

An economist, a member of the presidium of the Stolypin Club, Vladislav Zhukovsky, expressed and substantiated his opinion during a press conference at the DOS.

According to the economist, a seemingly paradoxical situation is now emerging, when, with a record growth in export revenues, the budget of the Russian Federation is gradually becoming scarce, and the economy is “curtailing”:

“We see a colossal influx of petrodollars into the Russian economy. We see a colossal surplus in foreign trade: against the background of an almost two-fold drop in imports to Russia (from China – by 40%; from Europe – by 45%; from the USA – by 90%) and despite the fact that prices for raw materials are high, as a result of which export earnings are about 60% higher than last year.

As a result, we get a colossal foreign trade surplus of $192 billion (this is the export of goods and services minus imports). This is a huge income, it is almost 3 times more than in January-July last year. And, it would seem, we should choke on the colossal petrodollar revenues; it would seem that everything should be fine: the economy should grow, investments should grow, the number of jobs, wages, retail trade turnover, the purchasing power of the population and budget revenues should grow. But for some reason this doesn’t happen.

The latest data that came out on the federal budget show that already in the summer we will have budget deficits, and federal budget expenditures will be greater than its revenue receipts. It all comes true. In July, about 900 billion rubles is a hole in the federal budget in about one month. That is, we are losing about 25-27 billion rubles a day. It’s like the budget of the Jewish Autonomous Okrug or Kalmykia. That is, for now (from January to July) there is a budget surplus, but it is already less than 500 billion rubles.”

Already now, according to the economist, it is clear that the economy is “spinning”:

“The purchasing power of the population is declining, real pensions for the first half of this year fell by almost 5% after that, retail falls by about 9.5%, wholesale trade showed a decline of more than 18.9%, and the collection of domestic taxes begins to decline sharply.”

In addition, as Vladislav Zhukovsky explained, high gas prices do not guarantee an automatic increase in Russian revenues:

“On the one hand, we can endlessly rejoice that gas prices in Europe on the stock exchange reach 3 thousand dollars per thousand cubic meters, but we need to understand that we have long-term contracts, although they are tied to a greater extent on the spot market than on the energy basket, as it was 10 years ago. But now we have a very serious decrease in the physical volumes of gas supplies: now we have, by and large, only one “branch” of gas pipelines – this is Nord Stream-1; “Yamal – Europe” does not work at all, and “Urengoy – Pomary – Uzhgorod” works at about 15-20%. We already see that Gazprom is reducing gas production by 37% in June compared to June last year. Gazprom’s share in the European market has already fallen below 12%, although at the end of last year it was about 40%. In this situation, one must understand that simply high prices for raw materials no longer save.

At the same time, according to Vladislav Zhukovsky, the government does not offer any sane plans to revive the declining economy:

“Unfortunately, so far the entire anti-crisis concept boils down to the fact that “let’s turn the rivers of oil, gas, coal, aluminum and everything else from the western direction to the east.” (…) Previously, 80% of Russian gas supplies went to Europe: out of 185-188 billion cubic meters of gas per year, 150 went to the European market. As far as gas supplies are concerned, it is infrastructurally impossible to quickly reorient such a flow, because in principle it will not be possible to build gas pipelines to Asia faster than in 5-7 years. As for oil, it’s simpler: now about 3.5-3.7 million barrels per day are shipped by sea.”

But in general, according to the economist, apparently, no one is actually going to abandon the “pipe economy” in the foreseeable future, and our government hopes that Chinese or Turkish ones will open instead of American and European factories on the territory of the Russian Federation.

Sergei Ishkov.