Translated material
Devaluation of forecasts
Experts believe that the first revision of the 2009 budget parameters will not be the last
Yesterday was rich in forecasts regarding the future of the Russian economy. It seems that government analysts were not alien to folk traditions and managed to tell fortunes for the year ahead during Christmastide, which ended the day before yesterday. The secret knowledge revealed to officials is not very encouraging: inflation for 2009 will be no less than last year, the national currency will depreciate to an average of 35 per dollar, GDP growth, if any, will not exceed 2%. And independent experts consider the given figures to be unreasonably optimistic and believe that by the end of the year the forecasts will have to be changed more than once, and only for the worse.Early on Monday morning, Moscow time, when it was the height of the working day in Hong Kong, Russian Deputy Prime Minister and Minister of Finance Alexei Kudrin, guest of honor at the Asian Economic Forum, shared his expectations for the coming 2009. They turned out to be much worse than the indicators laid down in the federal budget law for the next 12 months. Inflation will clearly exceed the planned 8.5% and will reach, according to Mr. Kudrin’s preliminary estimates, 13% (in 2008 it was 13.3%). “We expected this figure to decrease to 11% (and the 2009 budget still initially included 8.5%. - Ed. ), but the devaluation of the ruble will affect the rise in prices for imported goods, so now we are talking about 13%” , said the head of the Ministry of Finance.
The devaluation of the ruble by about 20% since September, according to the minister, “has created new guidelines in the economy,” however, Russia’s chief financier hopes that they will “have a positive impact on our demand and balance of payments.” From these words it obviously follows that the government has high hopes for the weakening of the ruble as a stimulus for economic growth according to the post-1998 scenario.
However, the government naturally does not count on maintaining pre-crisis growth rates in the event of any devaluation of the ruble. “Last year, Russia’s economic growth was 6%. In 2009 we expect a positive value, but at a level from zero to 2%. These new forecasts are related to estimates of the global economy and demand for Russian exports,” Mr. Kudrin said in Hong Kong.
And already after lunch on Monday, the official position of the country's leadership was confirmed at the government presidium: the dollar to ruble exchange rate in 2009 is expected to be 35.1 rubles, inflation in Russia at the end of the year can reach 13%, said Minister of Economic Development Elvira Nabiullina. Prime Minister Vladimir Putin instructed to recalculate the budget for next year based on the oil price of $41 per barrel Urals.
Experts generally approve of the self-criticism of the government, which did not delay the revision of forecasts and the 2009 budget, but believe that the new guidelines will not stand until the end of the year.
“8.5% inflation was an extremely optimistic forecast,” Elena Matrosova, director of the Center for Macroeconomic Forecasting at BDO Unicon, told Vremya Novostey. Even at the end of the year, it was clear that inflationary pressure was exerted by the devaluation of the ruble, and high import dependence would also affect prices. According to the expert, the debt problems of companies will definitely affect the fall in production and the supply of imports. “The situation in the monetary sphere is also unfavorable: compression of the money supply, rising interest rates - there is simply not enough money for production,” states Ms. Matrosova. “The forecast revision is timely; the previous one clearly undermined confidence in macroeconomic forecasting,” the analyst approves of the government’s decision.
But this should be only the first step: “The functions of economic authorities are not to state worsening trends, but to make efforts to support the economy,” Elena Matrosova is sure. “The state can ensure positive GDP growth by supporting domestic demand, which should compensate for the reduction in external and investment demand.”
Igor Nikolaev, director of the strategic analysis department at FBK, also agrees that the new forecast is more realistic. “The fact that it was necessary to revise the forecast is clear; the current one is completely indecently far from reality, and there should have been no delay in revising,” says the expert. But the new figures, in his opinion, cannot be considered adequate. “35 rub. for a dollar - sorry, but this is absolutely unrealistic. We can talk about forecasts of 40 and above. Inflation of 13% is closer to the truth, but we are guided by a forecast of 15%,” Mr. Nikolaev told Vremya Novostei. In his opinion, all the fundamental factors influencing the rise in prices remain: a non-competitive environment with an insufficient supply of goods, the accelerated growth of tariffs of natural monopolies, which further inhibits economic development.
“We are moving towards stagflation,” the analyst predicts. -- Rosstat is delaying the provision of industrial data for December, which, obviously, will be even more depressing than November (the fall in industrial production in November compared to the same period last year was 8.7%. - Ed. ). And the established trend continues.”
The range of the forecast for 2009 for GDP is quite large, but, according to FBK estimates, it is not positive: the company’s analysts expect a decline from minus 4% to minus 15%. “And you shouldn’t entertain the illusion that oil will rise in price and save us. The price of hydrocarbons is determined by fundamental factors, and not by the actions of OPEC, and the state of the world economy is such that demand and prices will only fall,” Igor Nikolaev advises against deluding himself.