HSE experts said the deepening recession in Russia


In late may, Russian President Vladimir Putin said that the bottom of the crisis has been passed still in 2015, economy Minister Alexei Ulyukayev has previously estimated that “the deepest part” of the crisis had passed by mid-2015. Do not agree with the economists from the Higher school of Economics: dynamics of demand indicates that the bottom of the crisis was not passed, the economy still deeper into recession, the leading expert of the development Center of the HSE Mykola Kondrashov in the latest “Review of the state and business”.

The demand is not growing

Dynamics of GDP is determined by demand and stocks, says Kondrashov. The latter is extremely volatile, therefore, to determine when the economy will go to growth, may be “more correct” to use indicators of demand. Indicator final domestic demand is seasonally adjusted dynamics of indices of retail trade turnover, paid services and construction. It reflects how the demand of the population, and the demand of the business. This index shows a historically more stable dynamics than the index of main sectors of the economy. During the crisis of 2008-2009 took a year for this figure began to grow.

In contrast to the index of basic industries, which really began to rise by mid-2015, the increased demand continued to decline and after a phase of a sharp drop in 2015. “That is, the increase in production (the production of basic industries), which was observed in the second half of 2015 and which gave many the hope that the “bottom” of the crisis passed, was largely provided with temporary positive contribution of factor stocks that have been misled about the prospects of transition of the economy to a sustainable recovery,” says Kondrashov. Thus, the dynamics of the index of consumption indicates a continuation of the recession. And in April 2016 and the production of basic industries continued to decrease, falling 1.9% the previous month, after rising in February—March. “According to our estimates, if the level of economic activity, as measured by the index of basic industries, will remain at the April level, the decline in GDP for the year will exceed 1,5%”, — sums up the expert.

The analysts of the Bank of Russia in late may, wrote that they expect “out of the economy on a trajectory of slow growth in the coming months in the absence of new external shocks”. It was about growth at the expense of the industries associated with domestic demand. “Statistics show that trade and consumer spending gradually emerge from the peak, though still low”, — stated in the review of the Central Bank. “We hope that somewhere in the middle of the year we will reach the zero level, gradually going to restore positive economic growth”, — said earlier the Minister of economic development Alexei Ulyukayev (quoted by the Agency “Prime”).

Economic activity has resumed falling

“After seven months overall neutral dynamics of economic activity, rather, heading for decline,” — said Kondrashov. “Perhaps it should be treated not as a reversal of the dynamics, but as a continuation of the underlying trends, which are increasingly reflected in the macro statistics”, — says the expert.

Retail sales in April fell by 0.3% — it falls almost continuously over the past 16 months. Reduced paid services to population — by 0.4% after rising 0.8% in March. This indicator has stagnated in the last two quarters, said the expert of Economics. Wholesale trade declined in April by 5.2% after rising 6.9% in the previous two months, however, the author of the review notes the high volatility and unreliability of statistics of this sector. Construction decreased by 5.8%, being below the level of July—August 2015, “which was previously the lowest point of the current crisis”.

As predicted in the last issue of monitoring the development Center of the HSE, there has been a rollback of positive statistics on the industry in a negative region: there was a correction data production — from growth of 4.3% in February and March to reduce to 3.5% in April, and, as a consequence, the growth of the mining sector by 2.9% in February—March gave way to fall by 2.8% in April.