The economy does not obey Putin

Russia’s economy is moving forward, but reluctantly. Well, not according to the formula “one step forward, two back”, but the steps are clearly is faltering. Their Rosstat monitors. It turns out that in the fourth quarter of 2017 step GDP lost again. If in the second quarter, the economy grew by 2.5% in the third 1.8%, given the annual growth of 1.5%, it turns out that the final quarter could not have gone further to 1.3%. There is a slowdown, as usual, inevitable, as the Ghost of hamlet”s father. And that doesn’t Bode well.


Slowdown no one officially explains. The government is obviously not up to it. It received the highest praise of the President, with genuine surprise on learning that did “everything he could and more.”and I don’t want to spoil the impression. In addition to his imminent presidential election is not exactly a holiday, and the band of the unknown. Unknown, of course, not the President, then everything is clear, and his own destiny. Who will remain in the office who leave — do not open any of the Ministers. Kitchen personnel under Vladimir Putin’s KGB secret and always good for surprises.

One thing is clear. Putin is definitely not forgotten the task that Russia must exceed the world average growth rate of the economy. And for this current is faltering pace should be doubled. The task, he is sure to remind the new government, even if it is one little different from the present.

What will happen next, we know from experience doubling the GDP or the implementation of the may decrees. The government will be in its own count the time to solve the problem, refer to the external factors, the available “growth potential”, which is “not hatched”. These arguments will be rational, and a statement of what, in fact, the government we have to solo arias are not accustomed to. All it can do in the field of economic strategy is to open the fan of cards, and the trump of them will pull the Kremlin. But he usually not in a hurry.

Judging by the discussion of another tax maneuver in favor of reducing the load on the payroll and the VAT rate increase, including the statements of the assistant to the President Andrei Belousov, a base strategy to a new presidential term selected offer Alexei Kudrin and his Center for strategic research. But “base” is not all the proposals. If you will be behind that painted not only in economic but also in political colours, and this, for example, upgrading the judiciary and liberation from the tutelage of the Executive power, including the presidential Administration, which controls the nomination of judges to higher positions, or adjustment of foreign policy, without which it can not get rid of the sanctions, the strategy in principle does not change. And that means that the task may soon, but acceleration will not be solved.

With a choice Kudrinskaya basic model of economic strategy, albeit incomplete, not everyone agrees. Perhaps it is linked to the nomination as presidential candidate Boris Titov, is known not only as the business Ombudsman, but also as one of the authors is different from current and conditionally Kudrinskaya economic strategy. However, the chances of Titov to demonstrate through the election of the competitiveness of their model, as shown by his participation in the recent Duma elections is very low.

In any case the curtains before closing the new (if new) the strategy of economic development, will rise after March 18. And what would be the closest answer to the next economic slowdown?

If someone will give it, and the Central Bank. Elvira Nabiullina has already been approved for a five year term, and the Central Bank aims to respond quickly to changes in the economic situation, the positioning is not spot-hand how the government (which may not, for example, suddenly change taxes) and macroeconomic tools.

The trouble, however, is that while the Central Bank considers its main task to support the economy. But keeping in sight the favorite target inflation, the Central Bank can not take into account the changed parameters. And they are: the Central Bank is still called “target” 4% price growth per year between the current level of inflation on the website of the Bank of Russia specified 2.5% (December 2017). But the Central Bank monitors inflation expectations. He admits that in January sharply (from 25% to 35%) increased the proportion of respondents who believe that the regulator will keep price growth at around 4% in 2018. 28% of respondents (compared to 23% in December) and is expected to maintain inflation near or below 4% per year. All of this suggests that inflation expectations finally got “anchored” to the 4%.

There is another factor that unleashes Central Bank cuts key interest rate, which in the official review does not say. “Bomb” sanctions did not explode. This, of course, is not so much about personal sanctions, how about the failed ban on investment by American investors in Russian government bonds. So, further protect the ruble from a blow in the form of the withdrawal of foreign investors from these securities is not necessary.

All together leaves no doubt in the fact that on 9 February, the Central Bank will reduce its rate. Push this step the economy is an open question. Rather, the descent will be carefully minimal and the slowdown will not stop. But it’s still better than nothing.

official channels

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