The Central Bank is rethinking trends - Newspaper Kommersant No. 166 (7367) of 09.09.

The Central Bank is rethinking trends - Newspaper Kommersant No. 166 (7367) of 09.09.



In the September issue of the review “What the Trends Say,” analysts from the Bank of Russia gave a picture of the state of the Russian economy that is different from that currently being painted by the optimistic representatives of the government’s economic bloc. First of all, the authors of the review note that the recovery in the economy in July-August is the result of consumer activity, fueled by a recovery in lending and increased budget spending. “Perhaps, it is precisely with such dynamics of the economy that the significant discrepancy between the generally negative assessment of the current situation with demand, production and income, on the one hand, and the prevailing positive expectations for the future, on the other hand, is associated with a generally negative assessment by enterprises and households,” analysts of the Central Bank note.

Layoffs in the labor market, along with an increase in the number of labor migrants, are likely to exert downward pressure on the dynamics of real wages in certain industries, the authors of the document note. Against this background, the supply of goods and services is likely to decline, and their quality will decline. Significant import substitution for similar products in most industrial sectors cannot occur in the short term, otherwise competition with imports would have been observed even before the sanctions were extended. In those cases where import substitution in the absence of competition turns out to be successful, manufacturers will benefit significantly and it will not be difficult for them to cover costs through pricing policy. Industries oriented to external demand, as well as segments of the manufacturing industry that are critically dependent on the import component, are now leaders in the decline in output.

The review notes that M2 money supply growth accelerated in July to almost 20%, the highest since 2012 (see graph). The reasons are the revival of lending activity, the budget deficit financed by free balances of budget funds, as well as the investment of NWF funds and an increase in transferable deposits as rates are reduced. “The double-digit growth of ruble monetary aggregates with the expected decline in the economy in 2022 signals the risks of an increase in the monetary component of inflation, that is, the risks of an increase in sustainable inflationary pressure,” Central Bank analysts conclude.

Alexey Shapovalov



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