Economists have warned about the twisting spiral of a recession in Russia


The January decline in production (in the basic industries after excluding the seasonal factor, they decreased over the month by 0.4%) increases the chances of a General deepening of the economic recession in 2016, the report “development Centre” Higher school of Economics.

According to experts, in January 2016 the level of economic activity fell back to more than seven years ago, while stronger than other affected sectors such as construction and trucking. The first volume in January fell 2.7%, losing all that managed to get in November-December last year, and turnover fell by 2.4%, including by rail — just 3.5%.

The index of industrial production for January has not changed since the downturn in the manufacturing sector. (-0,9%) was offset by an increase in the production of electricity, gas and water (+4.7 per cent). The growth in the sector, experts of the center of development associated with the fact that in January 2016, the monthly average temperature was below normal. However, in February the weather can play against the domestic industry.

“Since replaced by unusual cold January came unconventionally warm February, we can expect that the statistics for February show a sharp drop in the production of the infrastructure sector, which will pull down the entire index of industrial production”, — the report of the Center for development Economics.

By the end of 2016, the volume of Russia’s GDP, the consensus forecast CR HSE will be reduced by 1.5%, while the growth rate of 2% per annum, which until recently was perceived hardly probable not as catastrophic, the economy, according to the average opinion of experts, will be released only in the years 2021-2022.

Earlier, the Bank of Russia also downgraded the assessment of the annual rate of decline of GDP in January—March 2016, citing negative foreign economic conjuncture and the threat of weakening economic activity, and economists of HSBC and is predicted Russia the longest in the last 20 years recession.

Experts of the Center for development Economics emphasize the dubiousness of the former statements of heads the Ministry of economic development that Russia’s economy emerged from recession, as the statistics speak about the strengthening of negative trends.

“Taken together, the current dynamics of macroeconomic indicators indicates that the spiral of recession in the Russian economy continues to twist, and the main “regulator” that limits its scope, is a further correction of import”, — the document says.

According to the Centre for development Economics, in January 2016 the total value imported into Russia of goods decreased to $10 billion, which is the lowest indicator for the last ten years. The contraction of effective demand in conditions of high inflation and low exchange rate of the ruble led to the fact that the share of imports in domestic demand was reduced to 27% (during the crisis of 2008-2009, dropped to 25%) and may continue to decline.

“The decline in imports will lead to positive consequences both from the point of view of GDP (with the same volume of domestic consumption less imports means more domestic production), and from the point of view of the balance of payments. Even in case of preservation of oil prices at the level of January-February of the current year the inflow of currency on the current account hardly changes. This should help to relieve pressure on the ruble on the currency market and even somewhat strengthen it”, — stated in the report Center.

Experts note that a significant devaluation of the ruble led to the fact that the amount converted into U.S. dollars annual salary of the average Russian loses to the average Chinese. By the end of 2016 the difference between them may increase — at year-end are translated into dollars, the average salary of Russians will be reduced by 13% (in 2015 fell by 34%). Theoretically this can increase the competitiveness of Russian products in global and domestic markets, but experts doubt that this chance will actually be able to use.

“The chances that sensitive for the population, the deterioration of terms of payment does not give additional impetus to the development of domestic producers remain relatively high,” the report notes.

And the deterioration in the terms of remuneration are already evident. In January the average size of real wages in Russia decreased at an annual rate of 6.1%, and given the fact that in January of last year it fell by 8.4%. The risks of a further fall in real wages during recession are getting stronger, including because of rising expected inflation. According to the consensus forecast, in 2016 it will be in Russia approximately 8.9%, and the yield on the stated Central Bank medium-term target of 4% of the experts seems unattainable in the next ten years.

On the eve of the forecast of development of economy of Russia has lowered the credit rating Agency standard & Poor’s. According to experts of Agency, this year Russia’s GDP will shrink by another 1.3%, whereas previously it was expected that the economy will be able to recover after the fall of the previous year (-3.7 percent) and will grow by 0.3%. Previously their forecasts worsened and other representatives of the “big three” rating agencies: Fitch expecting GDP to 1%, and Moody’s is 2.5%.

With a warning about the increasing risk of a global recession made the day before and economists Citygroup Inc. “In our view, the growth of the global economy is in a difficult position after 2-3 years of relative calm,” he quoted the statement of the team Citigroup economists led by Willem buitenom by Bloomberg.