The Central Bank gave a disappointing forecast for the Russian economy

The Russian economy is ready to move into a systematic recession. Not because the financial situation of our country is teetering on the brink of collapse, but simply there is nowhere else to grow. At the end of 2023, our economy will reach the level of 2021 and will continue to slow down. “The phase of recovery growth as a whole is coming to an end,” according to the July report of the Central Bank on monetary policy.

The theses presented by the regulator sound quite decent, but some notes of drama can still be discerned in them. I would like to understand what these extremely academic formulations really mean for Russians.

According to the Central Bank, the indicators for 2021 have been achieved, first of all, in terms of the dynamics of household consumer activity. Simply put, today people have begun to spend more, take more loans, abandoning the savings model of behavior.

The activity in the economy is accompanied by a “noticeable increase in value added” in construction and real estate, transportation and storage, financial activities and agro-complex. The largest negative contribution is from lagging trade and production, the regulator states. According to the Central Bank, in the third quarter of 2023, GDP will grow by 3.6% (yoy) against 4.8% in the second quarter, and in the fourth it will be 1.5%. After that, the whole next year will remain at the level of 1.5%.

In many respects, what is happening is connected with the utilization of production capacities, which is higher in production (about 82%) than in processing (76%). At the same time, the manufacturing sectors are still severely short of labor. Real wages here are growing twice as fast as in the economy as a whole. As for the risks, the Central Bank once again points to inflation, which is spurred on by at least two factors – increased growth in consumer lending and a further increase in the shortage of personnel.

“The Central Bank proceeds from the fact that the failure caused by last year’s events (including sanctions, a drop in exports and a break in supply chains) has actually been eliminated today,” says Aleksey Zubets, a professor at the Financial University under the Government of the Russian Federation. – Industrial capacities, funds are at the peak of utilization, it will not be possible to increase it beyond the current level.

Therefore, it is obvious that the rate of GDP recovery will decrease, while we will certainly receive a 1.5% increase by December. In addition, now the government is forced to cut federal budget expenditures, which until recently were the main catalyst for economic processes.”

The interlocutor of “MK” considers the main pain points of the economy, firstly, the shortage of qualified personnel and the inability to quickly fill it, secondly, the underdevelopment of infrastructure for domestic production (due to unforgivably small investments in fixed assets in recent years), thirdly, low standards of the quality of life of the Russian population, which do not allow increasing domestic consumption. In the expert’s opinion, the sanctions do not have a decisive influence on the dynamics of GDP, but the archaic structure of the economy is not.

“In general, for the Russian scale economy, an annual rate of 1.5-2% can be considered stagnation,” says Andrey Loboda, BitRiver Communications Director. – In conditions of noticeably narrowed export markets, it is simply pointless to increase production. Today, growth is achieved primarily through the military-industrial complex, while agriculture, transport and logistics, domestic tourism, and high technologies still have enormous development potential.”

The period of extensive growth is over, the economy is moving into self-preservation mode, a kind of suspended animation. The logic is clear: in the face of rising inflation and a continuing budget deficit, we must not lose what we have. Accordingly, Igor Nikolaev, a leading researcher at the Institute of Economics of the Russian Academy of Sciences, notes that we need to get rid of thoughts about exceeding the growth rate of world GDP. Not to fat.

In turn, a slowdown in the domestic economy inevitably entails consequences that directly affect the citizens of the Russian Federation – real wages and incomes will decrease, goods and services will rise in price, the product range will narrow, and the quality of life in general will fall.

Sooner or later, the investment process will resume in the country. “The country will return to peaceful development, technologies and equipment will be purchased. But where can we get people for this activity?” – asks the doctor of economic sciences Yevgeny Gontmakher. He sees the key problem of the economy in the lack of specialists with the necessary qualifications. It’s like in a constructor: plastic elements should easily and reliably dock with each other using grooves – this is the only principle.