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| Russian economy stable while investments in emerging markets plummet - expert |
| Moscow, 16.07.2013 |
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| As the IMF scales back its global economic outlook for this year to 3.1% and cites a slowdown in the world’s top emerging economies as the main cause, the Voice of Russia talks to Daria Pichugina, Russian macroeconomy analyst at Investcafe, about the current state of Russian economy and the economic crisis in Europe.
Daria, what’s your opinion of the current situation in the Russian economy in general?
The situation in the Russian economy can be briefly described as more or less stable because we really see that inflation is not so high, not so far above predicted levels and the levels on which the Central Bank concentrates, so it is 7%, a little bit more than 7%. And also the oil prices recently thanks to the problems in Egypt have been up and also thanks to decrease in oil supply in the US. So, we see that oil now is more than 107 dollars a barrel. So, more or less the economy is stable now. We don’t see any signs of depression but also we can say that at the same time Russia economy is quite vulnerable because we depend a lot on the oil prices and there are no internal forces of growth.
Russia was doing fairly well just a couple of years ago with the GDP growth rate of more than 6% in 2010. Why this slowdown?
In 2010 we saw that oil prices were surging so they were much more in flow to the budget of cheap money, a lot of money that could be invested. There were a lot of possibilities in Russia to invest and foreign investors were looking at the market with more attention and more hopes than now. Overall, the investments in emerging markets are decreasing. So, of course it also affects the growth of GDP. And the main difference is that in 2010 we saw higher oil prices and we saw more optimism all around the economy not only in Russia but overseas as well and now we don’t see this optimism. Everybody is much more skeptical about the prospects of the economy both in Russia and outside and also we see that oil prices are not stable – more uncertainty, less investments, less GDP growth.
Does the economic crisis in Europe affect the Russian economy?
Yes, it does. Maybe not that much as the US and China but Europe of course is one of the major export parties of Russia. So, we depend very heavily on how much we buy. We don’t have many internal forces of growth, so we look at what other countries are feeling like and we try to build our own forecasts basing on what they do, what they feel like. So, of course European economy is affected a lot and it will influence even more with time because Russian dependence on oil prices will increase and oil and gas prices in Europe is one of the largest places to import and of course if they don’t import much, then the Russian economy will definitely suffer from this.
What kind of monetary course do you think Elvira Nabiullina will pursue as the new Central Bank chief?
I expect her to make the monitory policy less strict to make better credit terms for small businesses and by this to stimulate the growth in GDP. Everybody expects her to do this and according to what she says about her intentions it will probably be done, so we will see the interest rates going down and this will increase the money supply to the economy and we have seen that quantitative easing everywhere is progressing and making some really good results. So, maybe in Russia it will also help. Especially it will help to develop small businesses which are now in very bad situation.
Russia, investments, finances, BRICS, Economy
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