War with NATO, sanctions, global recession: the main risks for the Russian economy in 2024 named

Experts list events that could cause a crisis

Russia’s GDP growth rate in 2024, according to the Ministry of Energy, will slow down to 1.4%. Inflation by the end of next year will be equal to 4.5%. It is difficult to call these expectations pessimistic, but they will not come true if a “black swan” appears in the economy (this is the name for an unexpected event that breaks all forecasts and which is impossible to predict based on past experience). Experts listed the five main risks of 2024, which could provoke a more serious crisis than the authorities expect.

Risk No. 1 Official sanctions and hidden trade restrictions. Let us recall that in mid-December the EU introduced the 12th package of sanctions and immediately Czech MP in the European Parliament Tomas Zdekhovsky announced that the authorities of this supranational association had begun preparing the 13th and 14th packages of restrictions. At the same time, the EU emphasizes that even after the end of hostilities in Ukraine and the conclusion of a peace treaty, anti-Russian sanctions will continue to be adopted by the authorities of the member states of this association. It will also not be possible to lift the restrictions due to the position of the European Commission and the European Parliament, as well as the opinions of individual countries, such as Estonia, for example.

The already adopted 12th list of protective measures directed against Russia contains a ban on the import of non-industrial natural diamonds, artificial diamonds and jewelry containing diamonds into EU countries from January 1, 2024. And in another three months, from March 1, the import of Russian-origin diamonds processed in other countries, weighing from 1 carat per stone, will be stopped. From the fall of 2024, the ban will apply to Russian synthetic diamonds processed abroad, jewelry and wrist and pocket watches made there using Russian diamonds weighing 0.5 carats or more. By introducing these restrictions, the EU authorities tried to deal a blow to our country’s export revenues. In subsequent lists of protective measures, this trend may intensify, although, it would seem, there is nowhere to go. “The 13th and 14th packages of sanctions against the Russian Federation are being prepared, including discussions on restrictions on the work of the Moscow Exchange and the National Clearing Center (NCC; a ban on its work will lead to a halt in trading in the dollar and euro – editor’s note), explains the general Director of the management company “Admiral” Ivan Zakharov. “And also the potential seizure of assets of the Central Bank of the Russian Federation and Russian companies.” At the same time, the expert is confident that our country was preparing for such a development of events, and although it will not be easy, there are options for solving these problems, so this is unlikely to lead to a complete collapse of the economy.

Risk No. 2. A sharp decline in oil prices. A radical drop in world prices for hydrocarbons to $30-40 per barrel could become a “black swan” for the Russian economy, Zakharov is sure. However, the implementation of only this scenario, in isolation from the global recession, is unlikely, because the United States will not be able to quickly increase either production or transportation, and OPEC’s policy is on the side of Russia and the cartel member countries, on the contrary, are reducing production in order to support prices for “black” gold” at the level required by sellers.

Risk No. 3. Military conflict between Russia and NATO. The beginning of a military confrontation with countries belonging to the North Atlantic Alliance, against the backdrop of the fading potential of the Armed Forces of Ukraine, is often considered by political scientists as one of the scenarios for the outbreak of the “Third World War” or even a global Apocalypse. Analysts argue that the only thing holding Russia’s opponents back is the risk of receiving a response that is destructive in every sense from it in the military sphere. “I also think this scenario is unlikely: everyone understands what weapons and capabilities our country has,” Zakharov noted.

Risk No. 4. Global recession. According to the associate professor of the department of global financial markets and fintech of the Russian Economic University. G.V. Plekhanov Denis Perepelitsa, a significant “black swan” of 2024 is the danger of the onset of a global recession associated with a crisis caused by excess dollar liquidity. Over the past 3 years, 80% of the existing dollar supply has been printed, the scientist recalled.

In addition, a possible slowdown in the development of the global economy will also lead to a slowdown in industrial production, which means that countries will need less hydrocarbon raw materials than during rapid growth; accordingly, demand will decrease, followed by oil prices creeping down, which is dangerous for Russian treasury. “In 2024, there are very high risks of a slowdown in the growth rate of the global economy against the backdrop of the tough monetary policy of the world’s central banks and especially the Federal Reserve System,” believes Vladimir Chernov, an analyst at Freedom Finance Global. “Against this background, global demand for crude oil and petroleum products, as well as other export goods of the Russian Federation, may fall, which will lead to a decrease in their cost and revenues of the Russian budget.” This scenario may come true if high refinancing rates remain for a long time – longer than the first two quarters of 2024.

Risk No. 5. “Knife in the back” or betrayal of Russia’s friends. According to Chernov, “black swans” for the domestic economy can come from so-called “friendly” states. If, for example, one of the countries refuses foreign trade relations with Russia against the backdrop of political pressure on it from the “unfriendly” West, there will be problems. It will be difficult to quickly replace all volumes of exports and imports with friend countries, which could lead to a decrease in our budget revenues.