Russia is returning to economic development without changing the tasks set earlier

The President’s speech at the St. Petersburg International Economic Forum (SPIEF) was devoted, if not to go into details, to only one goal: to show both internal and external audiences that Russia is fully returning to the trajectory of economic and social development of 2014-2021, practically without changing the tasks set earlier. The question of what was a natural result of the actions of the authorities in the soft and with minimal losses of the transition of the Russian Federation to new economic conditions in 2022–2023, and what was an independent coincidence of circumstances, was not discussed at SPIEF. In fact, almost everything depends on this.

If the content of Vladimir Putin’s speech at the SPIEF plenary session on June 16 was anyone’s guess, few would have been successful: his speech was extremely traditional for the country’s main economic forum, and that is why it looked extremely unusual in the current context and on the news agenda. Assume that the head of state will devote his entire speech (he had to apologize several times to Algerian President Abdelmajid Tebbun for the fact that there were almost no international topics in it) to issues that are completely understandable only to those who followed the domestic economic agenda of the Russian Federation in 2014-2021 , before the pandemic and the start of the Russian military operation in Ukraine, it was simply impossible. This, in fact, showed the continuation of the plenary session: the moderator, Channel One host Dmitry Simes, almost immediately after the end of the traditionally long and very detailed speech of the president, returned to the “television” agenda of recent years – geopolitics, issues of neo-colonialism, the military situation, the historical fate of Nazism, Jewish issue, etc. — and in the further discussion, the topics declared in the speech of the head of state as the main ones were practically not discussed.

Meanwhile, the president’s speech was probably his main message both to those gathered at the SPIEF (large near-state business and the administrative apparatus of power) and to the international audience – and its main thesis was very ambitious. The de facto head of state not only stated that the events of 2022-2023 did not change anything in the priorities of the economic and social development of the Russian Federation, the president demonstrated that he sees further movement exclusively in the same vein, considers everything new to be a logical continuation of the programs implemented in the second decade of the 21st century.

The de facto head of state not only stated that the events of 2022-2023 did not change anything in the priorities of the economic and social development of the Russian Federation, the president demonstrated that he sees further movement exclusively in the same vein, considers everything new to be a logical continuation of the programs implemented in the second decade of the 21st century. The change in the context in which they are implemented is, in fact, declared unimportant – the Russian Federation is returning (according to the president, it has not gone anywhere) to the same “pre-war” trajectory, and the state of its economy and the domestic political situation fully allow it to be done now and will allow it to medium term future.

In other words, neither major new military spending, nor a radical change in the terms of international trade (sanctions that have no precedent, the loss of a significant part of foreign trade partners), nor the withdrawal of anchor external corporate investors from the Russian Federation, nor the blocking of a significant part of international reserves, nor a sharp increase in economic uncertainty, according to the essence of the speech of the head of state, are not of decisive importance. These are important, but minor details that do not cancel the main one: there is no change and even a significant correction of the course, no new ideologies. “War in Ukraine” (quoting the president – ​​however, this phrase, based on his speech, is still considered incorrect) is feasible for the existing economic model as an addition to the previously built and developing socio-economic structure, and does not change it. This is literally what the president wanted to say at SPIEF himself, outside of opportunistic circumstances: and the circumstances (which happened later) can be discussed separately.

The additions to the development model made in 2023, as before, are not radical. So, regarding the social sphere, several statements were made about changes in support measures for Russians, but for the first time only the norm concerning women with children was announced. The President proposed to pay families an allowance for caring for a child up to a year and a half, even if the mother of the child returns to work during this period. Now the amount of the allowance varies from 8 thousand to 33 thousand rubles. per month and is calculated as 40% of the average earnings of a woman who has given birth. The idea to abandon the accrual insurance principle is probably related to the need to look for new reserves to reduce the poverty rate in the Russian Federation – at the end of 2022 it decreased to 9.8%, the target for 2030 is 6.6%. The new initiative is estimated to affect 2.5 million women. Given the current state of the Russian labor market, with its low unemployment rate and high demand for labor, it can be expected that many of these women will be ready to go to work. We note, however, that this and other social initiatives, as before, are not too expensive and are completely in line with the policy of 2014–2022.

The same can be said about all the President’s policy statements at SPIEF. You can think of them as a super-short digest. The dynamics of GDP-2023 will be higher than current forecasts – 1.5-2% growth. Programs to stimulate growth by macroeconomic methods are not discussed, as well as the departure from “fundamental market institutions, freedom of enterprise and guarantees for the protection of property”, as well as the idea of ​​a sharp increase in public debt and budget deficits. In social policy, fluctuations between targeted and categorical support will continue, the priority is the fight against poverty and the outstripping growth of real incomes. Deregulation and comprehensive support for private entrepreneurship is a priority; they have already shown themselves as a growth factor. Russia did not engage in de-dollarization as a policy, but the reduction of US influence on the world economy and the use of the dollar as a weapon made it irreversible and objectively beneficial. Support for the repatriation of capital from “unfriendly” countries will be comprehensive and very persistent (“… a situation where funds are earned in Russia and then deposited in foreign accounts carries obvious and often unacceptable risks not only for the state, but also for Russian business itself”) . The problem of the technological blockade of the Russian Federation exists, but it is exaggerated: the state will stimulate technological development, including the creation of the “Forum of Future Technologies”. Finally, Russia is one of the “new centers of development” in the global economy, the hegemony of the G7 countries led by the United States is coming to an end – this, according to the president, is the main thing in the global context, the rest are details.

Apparently, the only fundamentally new ideological theme of the president’s speech at SPIEF was the announcement of a course towards a “supply economy” as an alternative to the “demand economy”. So far, it is difficult to fully reveal the meaning of this ideologeme (standardly, the “demand economy”, in which it constantly exceeds supply, was considered in the USSR as a basic model, a stable excess of supply over demand is typical only for the labor market). The slogan of the “economy of high wages” is complicated and re-formulated (the president proposed abandoning the idea of ​​​​competing the cost of labor with other jurisdictions, betting on high-tech development). For the first time in his speech, there were no directly pro-demographic notes, on the contrary, the head of state stated that the hopes for a strong change in this area are doubtful. Otherwise, the President’s speech at SPIEF was a speech to which any “systemic liberal” of 2014-2021 could add little.

At SPIEF in 2023, there was practically no one to ask the main question in a new context: what makes it possible to return to the course of past years, considering that additional systemic risks have not appeared. In the version of the head of state, this is the result of the social and economic policy of the Russian authorities, there were no accidents, mistakes of opponents and external factors, which means that in 2024-2026 everything will happen as prescribed by the version of the theory of socio-economic development supported by the authorities . However, in essence, the disputes with the main course at SPIEF ended much earlier than earlier this year – if the head of state correctly understands what is happening and why, then his forecasts should certainly come true without any surprises.

Dmitry Butrin, Anastasia Manuylova, Diana Galieva