The Russian economy has struck a new low

Recorded in may 2016, the decline in most indicators of economic activities indicates the deepening recession, the report prepared by the development Center of the Higher school of Economics (HSE). According to the experts, over the last two months of spring the Russian economy shrank by 2.5% had become less than in may 2015, which is still considered “the bottom of the current crisis.”

“The rebound from the “bottom” observed in the second half of 2015, was completely played out: from the beginning of the current year more clearly negative trend, indicating that the economy continues to deepen the recession”, — the report of the HSE Comments about the state and business”.

Earlier, representatives of the Russian authorities have repeatedly stated the country’s economy “bottom” and stop the fall. In may 2016 that “bottom” is left behind stated President of the country Vladimir Putin.

“The low unemployment rate — less than 6%, a moderate external debt — one of the lowest, and the trade surplus of $160 billion in 2015. The result — and this is acknowledged by the experts — the bottom of the crisis in 2015 can be considered passed,” — said the head of state at the summit Russia — ASEAN.

A similar assessment was made then the Minister of economic development of Russia Alexei Ulyukayev, who said that the Russian economy is not in recession for six months. In mid-June the same Ulyukayev said that the lowest point of the recession passed, there is a rapid recovery, and, since the third quarter, the Russian economy will show growth. “The recession in the economy will completely cease by the end of this year”, — assured the Minister.

HSE experts of optimism of politicians do not share and are among the most worrying indicators regular decrease in consumer demand. Analysts note that retail turnover in Russia has been falling for 17 consecutive months and in may 2016 was reduced (compared to April minus the seasonality) is still 1.1%. (According to Rosstat, retail trade turnover in may 2016 at an annual rate fell by 6.1% in the same month rose 0.8 percent). In this case, more the other dropped food sales, indicating deterioration of the welfare of the poorest segments of the population.

To stop the decline of demand from the population even after the slowdown in consumer price growth (from 1% in may to 0.4% in April-may). Simultaneously, husillos the state of Affairs in other sectors of the economy: the turnover declined in may by 0.3%, the volume of industrial production — 0.2%), construction (from 6%.

“Thus, in April and may the state of the Russian economy sharply deteriorated, despite the increase in the price of Urals crude oil from $30 per barrel. in January-February to $40 and $45 in April and may respectively. The deepening recession in these months was so great that, while maintaining economic activity at the level may drop in GDP for the year will be 1.5-2%, although we expected to see such a drop only when the price of oil [for] $35. It is hoped that at least the oil will resume its fall”, — stated in the report.

The sharp increase in world oil prices, according to experts from the HSE, could help the resumption of economic growth, but to count on it in the near unlikely. The report stresses that currently (in the course of today’s trading on the stock exchange ICE cost of a barrel of Brent fluctuates a little above $51), the oil market is close to its local peak, and in the near future and may fall.

“We are not yet inclined to change his assessment of the average annual price of Urals of $40 per barrel. for the current year. If the first half of the year the price of a barrel averaged about $37 in the second half, we expect the maximum reduction in prices from a peak of early June in the range of 20%. We also do not rule out another short-term price collapse to minimum annual levels. In this case, the average price will be several dollars lower, depending on the duration of maintaining low prices”, — stated in the document.