Translated material
Definitely double digit
Russia will continue to exceed its inflation target in the coming years
Yesterday in the Federation Council, at a round table meeting on the topic “Improving the quality of macroeconomic forecasting as the basis for the stability of the three-year budget,” the director of the financial policy department of the Ministry of Finance, Alexey Savatyugin, admitted that “ inflation will most likely be double-digit this year. We are not sure that it will be single-digit next year ,” the official said. At the same time, representatives of the macroeconomic bloc of the government unanimously complained about how difficult it is to predict anything in the domestic economy .Deputy Director of the Department of Financial Policy of the Ministry of Finance Oksana Sergienko supported her boss, Mr. Savatyugin, recalling that as of April, annualized inflation already exceeds 14%, while in April 2007, annualized inflation was only 7%. As a result, it amounted to 11.9%.
From the data that the Ministry of Economic Development distributed among the experts participating in the round table, it follows that the inflation forecast for 2008 will most likely be raised to 9-10% in the near future. The price growth indicator for 2009 was also changed to 6-7.5% (previous forecast - 6.7%), for 2010 - 5.7% (from 5.6%), for 2011 - 5--6.8% (5--5.8%). But these data, according to the director of the consolidated department of macroeconomic forecasting of the Ministry of Economic Development and Trade, Gennady Kuranov, have not yet been sent to the government. According to him, these are only “working materials.” Mr. Kuranov was able to officially confirm only the forecast for price growth for April - 1.3-1.4%. Let us remind you that at the end of two weeks of this month, inflation amounted to 0.8%, and since the beginning of the year - 5.6%.
In his speech, Gennady Kuranov explained what problems arise in the process of forming a forecast of the main socio-economic indicators, “without any justification for the quality of our forecasts.” Namely: not very high-quality statistical data, not amenable to any influence by external and internal factors. One problem that aroused the most sympathy among those present was the presence of 2,000 instructions from the president and the government, although “our main (MEDT - Ed. ) order should be the development of forecasts,” as Mr. Kuranov put it.
Alexey Savatyugin, as proof of the complexity of forecasting, gave an example of an English forecast from the beginning of the 19th century, which predicted: with such a rate of development of horse-drawn transport, by the end of the century London would be mired in horse manure. But the city began to choke in car smog. Oksana Sergienko had to prove more convincingly the difficulty of qualitative forecasting in modern Russian conditions. She said there was a "systemic problem" that she believed was differentiating between the purposes of forecasting. For budget needs, forecasts must be conservative, in particular for oil prices. And “in order to assess the situation in the country, it is desirable to have several forecast options,” explained Ms. Sergienko.
Problems, in her opinion, are also created by the lack of goal setting in macroeconomic policy. As Ms. Sergienko recalled, the Ministry of Finance has long been proposing to switch to inflation targeting (when a specific inflation forecast becomes a rigid goal rather than a guideline). This would be useful, given that by August 1, 2008, the Ministry of Finance must submit a 15-year financial plan to the government. In this regard, the ministry sent a request to its colleagues from the Ministry of Economic Development and Trade to prepare a forecast of macroeconomic indicators for the planned period - another instruction in addition to the two thousand previous ones.
Experts are concerned that the inter-industry balance, which reflects costs and output throughout the economy, is not used enough to forecast macroeconomic indicators. It should be compiled on the basis of a complete statistical survey of the economy, which was last conducted in the early 1990s, and the next MEDT is expected no earlier than 2016. Mr. Kuranov assured that the ministry updates the balance every year and uses it.
In the meantime, the Ministry of Economic Development is going to raise the forecast for GDP growth for 2008 to 7.6 from 7.1%, and the forecast for the average annual price of Urals oil for 2008 to 90 dollars per barrel from 86.