Russia and the world will face various financial and economic risks in 2008
Roadmap of disasters.
In 2008 Russia and the world will face a variety of financial and economic risks. The report of the World Economic Forum (WEF), traditionally published in the first half of January - a couple of weeks before the start of meetings in Davos, has become a real guide to the world of future catastrophes. Of all the variety of risks described in the WEF report - geopolitical, social, natural, technological - The New Times found it interesting to single out financial and economic ones and, with the help of experts, assess how relevant they are for Russia.
Top five global financial and economic risks (according to WEF)
1. Systemic financial crisis caused by the complexities of the leading world economy - the American one. The authors of the report express concern that the liquidity crisis in the US will determine the downturn in the country's economy over the coming year. In America, they can't find a solution to the mortgage crisis, the metastases of which are already manifesting with might and main in Europe, whose financial systems are closely intertwined with overseas. Accordingly, the WEF report seriously analyzes the likelihood of a collapse in real estate markets in the above regions, that is, in fact, in all the leading economies of the world. This, according to the authors of the report, fits "a sudden serious fall in the US dollar ... with consequences for the (global) financial system."
Evgeny Gavrilenkov:
The WEF scenario for American finances is too pessimistic: so far, many economists assume that even the United States, not to mention other developed countries, will be able to avoid negative developments. In particular, in December, the OECD (Organization for Economic Cooperation and Development) predicted that although the growth of the economies of its 30 members will slow down from 2.7% to 2.4% per year, the US will be able to avoid a recession. Accordingly, it is unlikely that the Russian economy should be afraid of the threat of a global financial crisis that came from the West.
Slowdown in China's GDP Growth China's economy has recently had a special role in the world: it is the fastest growing in terms of pace. Accordingly, it is on the Celestial Empire today that, on the one hand, the mass production of cheap consumer goods, the demand for which is in all corners of the globe, depends, on the other hand, the need for energy carriers for their growing needs, on the third, the stability of the dollar, which is the main content of Chinese gold and foreign exchange reserves - the largest in the world (1.435 trillion dollars). As soon as the Chinese economy does not even fall into a crisis, but simply sharply reduce its growth rates, one of the main modern financial “locomotives” will stop. With understandable negative consequences for all the "cars" - the economies of other countries.
Igor Nikolaev:
Of course, the Russian economy to a certain extent depends on the Chinese: we have many large-scale projects in the field of railway and pipeline infrastructure, oil and coal supplies. The industry of the Russian eastern regions is largely focused on China. So we are not indifferent to what is happening with the economy of China. Another thing is that it is now very hot, and I do not expect it to cool down in 2008. For sure, the upcoming Beijing Olympics will also support the growth of Chinese GDP at the level of 10% and above.
3. Rising food prices In 2007, the prices of many basic foodstuffs reached record highs. Rising prices in some cases led to political instability. According to experts, human losses from hunger in 2008 may exceed 1 million people. Among the main reasons for rising food prices are an increase in the world's population and rising living standards, an increase in biofuel production and climate change. Food shortages can become a risk not only for one year, but for the entire 21st century, the WEF report notes.
Yevsey Gurvich:
Of course, this factor will hit the Russian economy, regardless of whether we export or import this or that type of food. An increase in world prices for grain, meat and other products invariably leads to an increase in domestic prices. Practice shows that our government reacts badly to this threat: it could well include "protective measures" of customs and tariff regulation, without waiting for the situation last autumn, when it was no longer possible to contain the rise in food prices. Be that as it may, the flywheel for unwinding the rise in food prices in the world has been launched, and Russia will not be able to stay on the sidelines.
4. Rise in the price of energy resources The availability of energy resources is a guarantee of the development of the world economy. Meanwhile, the probability of rising oil and gas prices has not changed since last year and remains quite high. Actually, in 2007 the world economy brilliantly implemented this WEF forecast and even “overfulfilled the plan”. Recall that at the beginning of last year, oil cost about 55 dollars per barrel, and by the beginning of 2008 came close to 100 dollars per barrel. Other energy carriers rose in price at similar rates. Predicting an increase in oil consumption by more than a third by 2030, the authors of the report note the extremely low probability of falling energy prices in the next decade.
Igor Nikolaev:
At the moment, in my opinion, the world economy as a whole has adapted to the high level of energy prices. Until recently, it seemed that $100 per barrel was a global catastrophe. However, in practice, not only did no catastrophe occur, but the growth rates of a number of leading economies (including China and Russia) did not slow down. But there is a certain threshold ahead (for example, if oil prices rise by another 50%), after which the high price of energy carriers will start to have a depressing effect on the world economy. This fully applies to Russia.
5. Vulnerability of global supply chains Over the past 20 years, improvements in global logistics technologies, along with the reduction of trade barriers, have led to a significant expansion of international and regional trade. At the same time, the endless “optimization” of trade networks, WEF experts warn, may increase the risk of their destruction due to the concentration of risks. All companies and governments that depend on external providers are at risk of experiencing the consequences of such disruptions. Therefore, as the report argues, building a new supply chain system is a key step to reduce risks in global trade.
I consider this threat exaggerated in principle, and for our country in particular. Thank God, the world market is now highly competitive. And all supplies in the vast majority of sectors are carried out by a large number of suppliers. And competition exists, including in the field of logistics. There will be no global crises in this area.
Five main threats to the Russian economy (according to The New Times experts)
In addition to assessing the risks for Russia that are named in the WEF report, we asked our experts to name the most important, in their opinion, threats to the Russian economy in the coming year.
Accelerating inflation
Mikhail Delyagin:
The state has lost control over price increases. Inflation grew in 2007 by almost 12% - one and a half times higher than the mark planned by the budget. Moreover, this figure, officially recognized by the government, according to a number of experts, is underestimated by 2-2.5 times. It is absurd to expect inflation to decrease in 2008. It is already clear that against the backdrop of a record high price of oil, gasoline will rise in price. In addition, budget expenditures in the 4th quarter of 2007 increased 2.3 times! The inflationary effect of such stuffing of money is comparable to hitting a piano with a sledgehammer. Before the elections, the state appeases not the voters, but officials: 60% of additional expenses are intended for state corporations.
Growth of corporate external debt
Yevsey Gurvich:
Today's public debt is quite small and not a cause for concern. But the external debt of the private sector is growing. On the one hand, this is good: resources are being attracted to develop the economy. But in the medium term, some companies may have problems servicing their external debt. At the same time, state-owned companies are the most dangerous sector: they borrow a lot of money, and investors do not refuse them, believing that in case of problems, the state will take responsibility. Over the past 4 years, on average, the debt of the non-state sector, including companies with state participation, has been growing in dollar terms by more than 50% per year. In 2007, the total debt of the banking and non-banking sectors exceeded $300 billion. If this continues, the risk will become obvious and will be realized in the future from 3 to 5 years.
Vulnerability of the pension system
Grigory Tomchin:
The aging of the population that is happening in Russia is exacerbated by transitional problems, such as the very large gap between pensions and wages. If the government simply tries to increase pensions, as it is doing now, then the pension crisis may turn into a budget crisis, since about 3% of GDP is spent annually on providing for pension needs. If we do not engage in the creation of a normal pension accumulation system by investing pension funds in toll roads, in highly profitable enterprises, in institutional companies, this may also become a serious risk.
Unreasonably high spending on the creation of state corporations
Evgeny Yasin:
In connection with financial abundance, too much money is spent on the creation of all kinds of state corporations. I think that the key role in the development of the economy should be played by the market and increased competition. This does not mean that state programs are not needed. But they should not be limited to the fact that, in fact, allied ministries are being restored in the form of state corporations.
Deterioration of banks' loan portfolio
The banking sector is developing very dynamically, but it is still quite vulnerable in our country. There are many banks in Russia, and not all of them are adequately reliable and transparent, which is why the level of trust of credit institutions in each other is not very high. So, on this field, from a relatively small push, circles can diverge, which we periodically observe. Therefore, it is necessary to continue the improvement of the banking system, improve banking supervision, perhaps stimulate the consolidation of banks, since large banks are more stable and have more opportunities to borrow.
