Nabiullina considers an imminent global crisis quite probable

The head of the Central Bank, Elvira Nabiullina, said that the risks for the global economy have shifted towards a tough turn of events. In her opinion, the scenario of a large-scale crisis in the world is not ruled out, however, the Central Bank’s baseline scenario for the global economy is considered the most probable.

According to the base scenario, the global economy will not face any new major shocks. Central banks will raise rates to fight inflation, which will affect economic growth, but a global recession is not expected.

At the same time, in a more negative scenario, the regulator expects that the increase in rates by central banks may not be enough to fight inflation. As a result, rates will be high, which will increase the cost of servicing debt and reduce the value of assets.

“Geopolitical tensions will grow according to this scenario, fragmentation and regionalization of the global economy will occur. Sanctions on Russia will intensify, we are considering this scenario with increased sanctions, and this will become another factor in the deterioration of the situation in the global economy, in turn. As a result, we can see a crisis comparable in scale to 2008-2009,” Elvira Nabiullina said during a speech in the State Duma (quoted from Interfax). She explained that because of this, demand for the main Russian exports will fall, as well as a deeper contraction in GDP and high inflation.

Elvira Nabiullina added that in the context of sanctions and the global crisis, it is necessary to speed up the restructuring of the Russian economy. “In recent months, the situation and the balance of risks for the global economy have shifted somewhat towards, if not a full-scale global crisis, then a more severe scenario. This is not a reason for us to just wait for events to develop, as they say, wait for the weather by the sea, ”she said. According to her, restructuring looks different for each industry. Someone needs to look for new markets, someone needs alternative sources of raw materials supplies from abroad.

According to the International Monetary Fund (IMF), by the end of 2022, the growth of the global economy will be 3.2%, in 2023 – 2.7%. In 2021, the indicator was at the level of 6%. Against the backdrop of a falling economy, inflation is rising in many countries, in connection with which central banks are raising rates.

More about the global economy – in the material “Kommersant” “Global GDP is not going up”.

Olesya Pavlenko