Translated material
New economic optimism
Macroeconomic statistics for May, represented by Rosstat, puzzled analysts a lot. She showed, in particular, for a long time not seen in the country, the growth rate of industrial production, which no one expected. In the expert community, this is explained by both the May working calendar and in a cold spring ... And someone-and the recent retrofitation of Rosstat to the Ministry of Economic Development. The ministry itself presented on June 21 more than optimistic assessments of Russian economy growth in May, and in general in the first five months of the year. But analysts do not yet see significant changes in those basic factors that could ensure such a sharp acceleration of economic growth.
The total volume of the Russian economy in the first quarter increased by 0.5% of the level of January-March last year, Rosstat confirmed its preliminary assessment. This means that the Russian economy formally left the recession, which lasted seven quarters in a row in it. The formal beginning or completion of the recession is a decline or, conversely, the resumption of economic growth within two quarters of the year in a row. And the first new GDP growth was noted in Russia in October-December 2016-by 0.3%.
In general, consumer demand in the country is too weak to explain such a statistical “leap” in growth assessments
However, much more attention of experts attracted the presented assessments of industrial production in May - as much as 5.6% to last year’s level, that is, at once 2.5 times more than it was only a month earlier, in April. And the growth for a month was more than impressive - immediately by 1.6% even taking into account seasonal and calendar factors.
How to explain this? And what assessments do you come from?
Valery Mironov , Deputy Director of the Research Institute “Development Center” of the Higher School of Economics:
- Speaking about the May statistics of industrial production, which really surprised everyone, it must be borne in mind that in May this year there were 20 working days, while in previous years - 19. And this alone allows us to evaluate the growth of production not so optimistic. In addition, an increase in the production of electricity and warmth in May because of the coldest for many decades of weather played a noticeable role. All this influenced ... Therefore, no changes at the modest growth rate of industrial production that were noted in the previous months occurred. According to our estimates, this growth was not 1.6%, according to Rosstat and some other structures, and not more than 0.5%...
These are three times less official assessments ... that is, you do not see some fundamental reasons for greater growth?
Valery Mironov:
- If in general, talk about the economic situation, then you need to keep in mind the weak investment activity of the business. Say, in large and medium -sized Russian companies, the growth of investments in the first quarter, according to our estimates, amounted to only 0.4%. And in order for a noticeable revitalization in the economy to begin, these pace must be ahead of the overall growth of GDP. That is, the same growth that, in the first quarter, according to Rosstat, amounted to 0.5%.
The fact is that export is one of the key drivers of industrial production in conditions when consumer demand in the country remains weak
Alexey Devyatov , chief economist of the financial company Uralsib:
- Indeed, the data presented look too “strong”, especially in processing industries. The growth rate were low and suddenly-please! - 5.7% literally from scratch, that is, almost from the zero level. Yes, there was more for one working day than last year. Secondly, I think, to some extent, the mitigation of monetary policy could positively affect the processing industries: since March, the Central Bank has reduced the key interest rate to a whole interest point-from 10% to 9% per annum. In addition, improvement of moods: apparently, industry is now more working “on a warehouse” than before. But in general, of course, as extreme, as stated, the growth of industrial production seems to be a single factor. I also doubt very much that such a pace will be fixed-there is no need to expect growth of 5-6% in the near future.
Approximately 50% of Russia's GDP - consumer demand and 20% - investment demand. May data suggests that the volume of retail in the country has not increased by the year by the year
The Central Bank of Russia sharply reduced its own forecast of the growth rate of private deposits in the country this year. If a month ago it amounted to 7-9%, now-only 2-4%, the newspaper Kommersant recalls . “Households began to save somewhat less from current income. We see this, including by the dynamics of deposits, which the growth of which slows down,” said Bank Chairman Elvira Nabiullina on June 16. The total increase in private deposits in Russia since the beginning of the year, according to the Central Bank, amounted to only 0.3%by the beginning of June. It turns out that the Russians began to save less ... But did they begin to spend more? Judging by changing the volume of retail trade in the country or paid services-not very ...
Valery Mironov:
- They did not save less. They save approximately like last year, but more in cash. Last year, the increase in funds in accounts and deposits slowed down, amounting to about 10% against 17% in 2015. Now, the tendency of slowing down is manifested even more clearly than the Central Bank expected. And this is primarily due to the fact that it was unprofitable to save both non -cash rubles and non -cash currency due to low interest rates on bank deposits. This is especially noticeable in foreign exchange deposits. That is, the population still accumulates both currency and rubles, but now more and more now-in cash. The process has been outlined last year, but now it, apparently, is only intensifying.
Alexey Devyatov:
-On the one hand, I think, the very tendency to save the savings really decreased-gradually people somehow get used to the current economic situation, it no longer seems “crisis” to them. Accordingly, they begin to take loans a little more, spend a little more ...
Therefore, no changes at the modest growth rate of industrial production that were noted in the previous months occurred
But is the general norm of the population’s savings (as part of its total income) is reduced anyway?
Valery Mironov:
-Due to the lack of any obvious improvements in the economy, it remains high. Say, in 2016, the total norm of savings in the population of Russia increased to 6% of cash income-after falling to almost 2% in 2014 and recovery up to 5% in 2015. And this year, according to our estimates, it will remain approximately at the level of 2016.
In order for a noticeable revitalization in the economy to begin, these pace must be ahead of the overall growth of GDP
Following the Rosstat, which presented the estimates of Russian economy in the first quarter - by 0.5% to the last year’s level, the Ministry of Economic Development itself has unveiled its estimates (which Rosstat is now subordinate ) - in the first five months of the year. It follows that Russia's GDP increased by 1.3%, and in May its annual growth accelerated immediately to 3.1% - after 1.7% in April. But such a noticeable acceleration, in theory, should be accompanied by an equally noticeable increase in internal demand in the country, primarily the demand of the consumer , as the main component of the total volume of the economy. It much exceeds the share of investment demand in it, that is, from companies and enterprises - for various raw materials, equipment or services for production. However, the Rosstat data show that in May the volumes of retail trade in the country remained at the same levels as a year earlier, and the volume of paid services even turned out to be smaller than in May last year. That is, there is no growth in any or another sector ...
Valery Mironov:
- approximately 50% of Russia's GDP - consumer demand and 20% - investment demand. May data suggest that the volume of retail in the country has not increased by the year by the year. There is no decrease in the growth rate of savings, just now they are more made in cash. That is, in general, the growth of consumer demand has not yet been happening - well, except that a certain revival arose in the car market ...
And the demand of companies and enterprises, that is, investment? ..
Valery Mironov:
- It is very slowly restored and but first of all due to investment imports: in the first quarter, the ruble has noticeably strengthened, and import, respectively, was cheaper. However, with the current fluctuations in the ruble and the general uncertainty of the economic situation, enterprises are unlikely to significantly increase investments and expand the purchases of imported equipment. The ruble is already weakening, and the general growth rate of industrial production, which is one of the factors of such investments, despite all the “optimism” of the May statistics, while remain sluggish.
Alexey Devyatov:
- The real incomes of the population are still lower than last year’s levels, and in general, consumer demand in the country is too weak to explain the statistical “leap” in assessments of industrial production growth. To some extent, I think industry helps a certain increase in non-Neniftegas exports for individual goods. However, here there is its limiting factor -strengthening the ruble in recent months.
That is, the population still accumulates both currency and rubles, but now more and more now-in cash. The process has been outlined last year, but now it, apparently, is only intensifying
You are talking about Neneftegazy export. And how much does it affect the ruble strengthening, according to your calculations?
Alexey Devyatov:
- Our estimates show that increasing the average rate for the year of the ruble by 1% leads to a reduction in non -$ 500 million. Therefore, if on average per year the ruble is strengthened by 10%, this means export loss of somewhere in $ 5 billion. And in terms of losses for the economy as a whole - minus 0.4 percentage points of GDP growth.
5 billion of the lost dollars from the total Russian exports during the year - a lot ...
Alexey Devyatov:
- If the total Russian export last year amounted to about $ 280 billion, then, respectively, 5 billion of them is about 2%. But the fact is that export is one of the key drivers of industrial production in conditions when consumer demand in the country remains weak.