Translated material
Growth decline
The government will revise economic forecasts for the worse
The long-awaited answer to the question of whether we have reached the “bottom” of the crisis came from statistics. The macroeconomic situation in Russia continues to deteriorate. The decline in GDP both in March and in the first quarter as a whole compared to the corresponding periods of 2008 amounted to 9.5%, Deputy Minister of Economic Development Andrei Klepach said yesterday. Therefore, the economic department revised the estimates for the winter months. The fall in GDP in January was 10.4% instead of 8.8 according to the forecast of the Ministry of Economic Development, and in February - 8.7% instead of 7.3.In this regard, the Ministry of Economic Development, through the mouth of Mr. Klepach, announced yesterday the start of a review of key macroeconomic indicators. So far, the official forecast for the fall in GDP for 2009 is 2.2%. Yesterday Andrei Klepach refused to give a new forecast figure. He only cautiously noted that the International Monetary Fund's estimates seem "quite realistic." The IMF this week published a report according to which Russia's GDP will contract by 6% in 2009 and grow by 0.5% in 2010.
The scientific director of the Higher School of Economics, Evgeny Yasin, told Vremya Novostei that the results of the first three months of the year do not give grounds for optimism, so the range of GDP fluctuations of minus 5-9% is quite likely. However, he added: "I'm very glad that I don't have the responsibility to report these assessments to the whole country."
Perhaps that is why Mr. Klepach is in no hurry to announce new macro indicators. “We expect that with the help of anti-crisis measures it will be possible to improve (the situation in the economy. - Ed. ),” the official said. In addition, the economic department expects some recovery in the oil market. The forecast for the average annual price of Urals oil has been increased from 41 to 45 dollars per barrel.
But, judging by estimates for the second quarter (and the Ministry of Economic Development suggests that the fall in GDP during this period will be 8.7-10%), anti-crisis measures will not produce results until the second half of the year. That is, precisely when, according to the estimates of another representative of the government’s economic bloc, Deputy Prime Minister and Finance Minister Alexei Kudrin, Russia could be hit by a second wave of crisis caused by an increase in non-repayment of bank loans. Then the decline may accelerate even more, and even the IMF forecast will turn out to be overly optimistic.
However, the head of the expert council of the public organization “Business Russia” Anton Danilov-Danilyan believes that this problem is relevant only for very large banks with state participation. “The fall in GDP is not associated with the notorious “second wave,” but with the general difficult state of the world economy,” he told a Vremya Novostei correspondent.
According to Mr. Klepach, the decline in the first quarter was mainly caused by an 18% reduction in investment. “Construction fell by 20%, net taxes in the GDP account decreased,” he added. “Accordingly, we get a picture of a significant drop in GDP both from the point of view of production and from the point of view of consumption.”
In addition, retail trade volumes began to decline for the first time in the last ten years. The fall in the first quarter was 1.1%, and it will continue. The forecast for the year will be revised. If earlier retail growth was expected at the end of 2009, albeit small (0.3%), but still growth, now a fall is planned. However, the Ministry of Economic Development has not yet specified which one. According to Mr. Klepach, the decline in retail is explained by a combination of crisis processes with high inflation and a decrease in consumer demand.
True, Mr. Danilov-Danilyan recalls that we had high inflation before the crisis, but this did not prevent retail from being one of the growth leaders. And in general, according to his estimates, the main problem is not related to the final demand of the population, but to a sharp contraction in investment demand, an almost frozen modernization of production and a decline in housing construction amounting to tens of percent.
For now, it was decided to leave the inflation forecast at the same level - 13%. But the chief economist of National Bank Trust, Evgeny Nadorshin, believes that everything is not so bad. “I have a feeling that the Ministry of Economic Development is overestimating the depth of the decline in the first quarter,” he told Vremya Novostey. According to his estimates, the decline for the year will not be as deep, about 4%, but longer. If the IMF predicts half a percent growth for Russia in 2010, then Mr. Nadorshin expects a continued decline next year.
However, Mr. Klepach notes, despite the fact that the situation in March turned out to be worse than in February, there are still positive symptoms in the economy: the auto industry and the food industry showed positive dynamics. In addition, in the second quarter, the movement of budget funds will begin as part of state support for economic sectors. Therefore, despite the decline compared to last year, compared to the first quarter of 2009, in the second quarter the Ministry of Economic Development still expects GDP growth to range from 1.3 to 2.8%.