Russia is losing 100 billion rubles every day due to the spread of COVID-19. This was stated by the Minister of economic development Maxim Reshetnikov. Russian GDP “these very large losses” will be worth the 4.5-5%, said the Minister. We found out how much Russia earns and that the decline in GDP mean for the ordinary people.
Your assessment of the depth of the economic crisis on April 25, followed Reshetnikov, also voiced Alexei Kudrin and Maxim Oreshkin. The head of audit chamber considers that the fall in GDP will be 5% for the year. The ex-Minister of economic development and current assistant to the President compared coronaries with the economic depression after the Second world war. However, a retired Minister, not to lose your optimism, he added that “Russia is prepared better than other States.”
Kudrin’s optimism is not shared and I am sure that at the peak of the crisis, we must actively spending from the national welfare Fund – half of the reserves or even more. The government is now “chipped” from FNB is one-third of liquid resources, estimated at 11 trillion rubles, including funds that will return to the budget from the purchase of Treasury shares of Sberbank from the Central Bank.
Oreshkin believes that the accumulated resources of Russia allow to stop some of the problems, but at this depth of the world crisis “to remain an island of stability is impossible.”
Reshetnikov noted that even with a budget deficit of 4.5-5% of GDP, the government will fulfill all social obligations. An even greater decline in the economy predicted the Central Bank – 6% of GDP in the adverse scenario.
the Fall in GDP is an abstract concept for ordinary people. It is clear that the problems of industries mean layoffs, job cuts and salaries. And what else awaits us? We talked to the head of analytical Department AMarkets Artem Usov Deevy and an expert on the stock market “BCS” Dmitry Bebinam.
If Russia loses 100 billion a day, how she “earns”?
Babin:, the country’s GDP in 2019 amounted to 109,36 trillion roubles, in day of Russia “earns” about 300 billion rubles. But you have to understand that GDP is the only macroeconomic indicator, the indicator of dynamics of the economy for a certain period. The fall in GDP of 4-6% means that the country was created by 4-6% less of goods and services for internal or external negative factors.
Deev: the Russian budget is formed by oil and gas revenues. Now the country continues to supply fuel at low prices, but the budget is still growing. In addition to the sale of raw materials, the country earns money by exporting grain, the atomic units by means of consultation, computer and technology services, exporting ferrous and non-ferrous metals, fertilizers, chemicals and products of agriculture. Naturalingly, because of the failure of technological supply chains, exports of goods declined. In 2019 to the coronavirus, it was expected that income will amount 20,379 trillion rubles, expenses – 19,503 trillion rubles and a surplus – 876 billion. Now about any surplus may not be considered.
what effect will a budget deficit and falling GDP for ordinary people, whose incomes and lives were now under threat?
Deev: the country has social obligations that it will deliver in any case: to pay the public sector wages, provide medical institutions with necessary equipment and medicines. But there are lower-priority expenditures, funding for which may be reduced due to the budget deficit. The construction of roads and social facilities programmes of modernisation of housing, spending on public administration and safety. That’s what the Russians have to face because of the budget deficit. In addition, if the state lacks resources, it supports smaller businesses, and firms go bankrupt, there is a lot of unemployed, to pay benefits which still have state. Impoverished people will ask for money and payment, increase of overdue loans in banks. Ahead of possible price increases: the reduction in output leads to supply reduction.
Before the crisis, Russia’s economy was growing, but very slowly – at 1-1,5% of GDP per year. Ordinary people little improvement is not felt that real income has not increased. Is it a big difference between weak growth and a five percent decline?
Babin: the Fall in GDP – the consequence, not the cause of economic troubles. In the current situation, the Russian economy experienced a double blow: on the one hand, the drop in oil prices several times to multi-year lows has hit the export revenue of the country. Although directly they constitute a small share of GDP, indirectly all industries in one way or another depend on export revenues: their decline leads to lower internal costs of the state and the chain slows down the activity in other industries. On the other hand, the Russian economy sustains damage from restrictive measures against the pandemic. They have sharply reduced consumer and business activity, together with the fall in export revenues has become a very negative combination for economic dynamics. As soon as at least one of these factors will begin to improve in the country will begin to be created and consumed more goods and services, and hence GDP will show growth or at least slowing the fall. GDP is tracked in dynamics. The decline in GDP for two consecutive quarters is considered a formal sign of the recession. But again, partial or complete leveling of the factors that caused the economic downturn, leads to the cessation of the recession and subsequent economic growth.
