Even expensive oil won’t help Russia: Kudrin made a gloomy forecast for 2019

The head of the Accounts Chamber, Alexei Kudrin, gave in an interview a gloomy outlook for the Russian economy with Bloomberg. Due to unresolved internal problems and sanctions, economic growth in Russia in 2019 will be below 1%. Even a sharp increase in oil prices will not help, as energy companies in the face of uncertainty will prefer to invest in international assets. It is not worth waiting for an improvement in the situation in the near future - the easing of sanctions will be possible only under the next presidents of Russia and the United States.

Details

• In 2019, Russian GDP growth “will be significantly less than 1%,” says the head of the Accounts Chamber, although earlier the Ministry of Economic Development and the Central Bank estimated economic growth rates at 1.3% and 1.2-1.7%, respectively. According to Kudrin, the sanctions, the devaluation of the ruble and the increase in VAT from 18 to 20% will contribute to the slowdown in GDP growth.
• The expectation of sanctions and possible devaluation reduces the current forecast for GDP growth at the level of 1.8-2% by 0.5 percentage points, and in the event of tough sanctions, the losses will be even higher, the head of the Accounts Chamber believes. Kudrin does not expect the lifting or easing of sanctions - according to him, this will happen at least in five years "under the next presidents of the United States and Russia." At the same time, Kudrin notes that the slowdown in the growth of the Russian economy is most affected not by external restrictions, but by “problems of internal institutional and structural reforms.”
• Hoping that the economy will be helped by rising oil prices is not worth it, Kudrin believes: “Even if the price of oil suddenly rises sharply, this will have a minimal impact on economic growth.” Due to the poor investment climate under the sanctions, oil prices have not contributed to improving the economic situation in Russia for a year and a half, Kudrin explains. “Their influence on economic growth is practically exhausted,” he sums up.
• Where, then, will additional revenues go when oil prices rise? Kudrin believes that not for investments, but for international assets that will help enterprises maintain liquidity in the face of uncertainty. “So the oil increase will increase the outflow of capital, and will not go to domestic consumption,” says the head of the Accounts Chamber.

Context

• According to the Accounts Chamber, with a predicted decline in oil prices and a depreciation of the ruble in 2020-2024, the economy will grow no faster than 2% per year (the government expects growth faster than 3% per year - this is a necessary condition for the implementation of the "May Decree » Vladimir Putin).
• The IMF is more optimistic about the future growth of Russian GDP. Fund analysts believe that in 2019 the economic growth rate in Russia will be 1.8%. In their opinion, the economy will be supported, in particular, by high oil prices and growth in domestic demand.
• about the “limited benefit” of rising oil prices for the Russian economy wrote Fitch analysts also in the summer of 2018. Oil prices have an even smaller impact on the ruble exchange rate, said . experts recently interviewed by The Bell
• The fact that the acceleration of GDP growth will be influenced by consumer demand is questioned by the data of Rosstat. It follows from them that in September the consumer confidence index of Russians recorded the sharpest decline since 2015, a period of a very weak ruble.

The worsening economic situation has already hit the wallets of Russians. In September

Liana Faizova