Accumulation of difficulties

There are more and more signs of a crisis emerging in the Russian economy. The same crisis that began in 2008 and never went away, but was only hidden in the fog of a false revival of markets.

There has been a decline in consumption in Russia. The population took out too many loans, which in 2010-2012 was a form of stimulating demand. The state especially tried to support it in the housing market. As a result, in the domestic economy one could observe processes that took place in the USA and the EU before the onset of the global crisis. In other words, Russia unconsciously tried to catch up with states where the economic crisis had a large internal basis. The authorities were not fully aware that the preconditions for the growth of internal problems in the economy were accumulating.

The emergence of a socio-political crisis in Russia at the end of 2011 and the approach of presidential elections pushed the government to freeze the neoliberal course and make a number of material concessions to the population. In fact, Keynesian policy was carried out in the country unconsciously - due to a misunderstanding, as IGSO Director Boris Kagarlitsky put it. Even the ruble was allowed to strengthen against the dollar until May 2012. Housing and communal services tariffs were frozen, as were neoliberal reforms in the public sphere. And it had a positive effect.

But the growth momentum began to fade in the summer, although by August industrial production in Russia increased by 3.1%. As a result of the “surprising” situation, even the Ministry of Economic Development raised its industrial production forecast for 2012 from 3.1% to 3.6%. Investments in fixed assets showed a good picture: in August 2012 they grew by 2.3% compared to the same period last year. However, Rosstat is forced to admit that investment growth slowed down in the summer: in June it amounted to 4.7%, and already in July - 3.8%. All these are important signs of the government’s curtailment of Keynesianism in its strange, forced and temporary form.

It was the temporary nature of the economic policy correction that became a signal for capital not to stop the outflow from Russia. Their flight continued throughout the pre-election period. It is also important that the authorities saw the crisis of the protest movement as a solution to the problem. In the fall, they did not change their understanding of the situation, which means that political reasons did not become the basis for a return to “unintentional Keynesianism.” From the very beginning it was seen more as a socio-political step than as an economic measure.

Many signs in the first half of 2012 pointed to a recovery in the economy. For example, transport load increased. However, by the beginning of autumn, alarm bells were ringing. The head of Russian Standard Bank, Dmitry Levin, expressed concerns that the achieved level of debt among the population without income growth could result in a deterioration in the quality of bank portfolios. Since the “end of the crisis,” the population’s debt burden has doubled, the bank executive emphasized. The current situation cannot be viewed without concern. The Keynesianism of government turned out to be half neoliberal. A bet was placed on a credit revival of the economy. After the markets stabilized in 2010, the Russian authorities tried to create conditions for a full recovery. However, investors remained wary and ensured that the outflow of capital from the country spoiled the picture. Many commercial analysts expect that consumer demand will decline in the second half of 2012. And this is quite natural, not only due to the curtailment of strange Keynesianism, rising food prices as a result of a bad harvest or weakening of the ruble, but also due to the large debt burden on the population.

By June, banks are believed to have increased their retail loan portfolios by almost 45% compared to the same period in 2011. All this is very similar to the credit boom on the eve of the “first wave” of the global crisis. Loan interest rates in Russia also remain frightening. It is so large, despite efforts to reduce it, that it could easily become a factor in destabilizing the banking sector during a downturn in the economy. And it is inevitable, unless the authorities begin to implement Keynesian measures again and more widely. However, the current situation is such that government liberals consider the measures taken to resume a broad neoliberal course as a victory.

The flip side of the revival of the Russian economy after the “first wave” is the sharply increased debt burden on household incomes. TsMAKP RAS notes: in mid-2012, the ratio of payments to disposable income exceeded the level of 2008, reaching 17%. However, the refinancing rate of the Central Bank of Russia remains high - 8.25%. And although it has been decreasing in recent years, this decrease remains insufficient to make credit in the country cheap or simply not usurious. According to the Central Bank of the Russian Federation, over the past ten months, consumer lending has jumped particularly strongly: annual growth rates are close to 60%. It is also important that the share of unsecured expensive loans is very large. All this is nothing more than a sign of poverty and credit patching holes in the hope of improving the financial situation, obviously based on the promises of the authorities.

The Russian economy is accumulating enough internal signs of a revival of the crisis. The global market is chronically unstable. Problems in China's economy pose a colossal threat. A slowdown in China's growth rates could deal a powerful blow to the planet's commodity markets. The obvious development of the crisis in Europe and the unobvious development before the end of the elections in the United States creates additional conditions for a recession in China. In such a situation, Russia should do its best to support and protect its market, but on top of that, the country has also entered the WTO.

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