Three surprise

Three surprise


Analyst Yulia tseplyaeva, that can contribute to the growth of the Russian economy in 2017

Photo: personal page of Julia Tseplyaeva in Facebook

2017 — largely symbolic. For people of middle and old age is the centenary year of the October revolution: a good excuse to draw some conclusions. For all of us this year, an election year. This is an important circumstance with which we associate certain expectations. Typically, in this year, we see solid growth in consumer spending, and I hope that in 2017 we here will not disappoint.

For today there is no doubt that the Russian economy has adapted to the new conditions. Decreased the depth of the recession. If in 2015 the fall of the economy has exceeded 3% in 2016- only about 0.5%. In 2017 we will move on to economic growth. However, one should not expect it to match the pace of post-crisis recovery between 2010 and 2012, when the growth rate of our economy was 4% year-on-year. According to our estimates, in 2017 this figure will be 1.2%.

But this raises an important question: what will feel our citizens? Now we are saying that the economy ceases to fall, and at the same time, many of any improvement notice. This is primarily due to the fact that incomes in real terms continue to decline and turnover in retail trade, which perfectly reflect the dynamics of consumer demand still on the decline. This means that although the economy moved to growth, the consumer sector growth has not yet passed, and therefore for most people, the crisis continues.

However, we believe that in 2017, not only the economy, but the consumer sector will begin to show a positive trend. This will contribute to wage growth and income growth in real terms. We expect that in 2017 will be fully indexed pensions, in January, our pensioners receive a lump sum payment in total of $ 200 billion in addition, we expect further growth of salaries in the private sector, their long-awaited indexation of civil servants. People will feel more confident, more optimistic, and consumption of goods and services will rise. We expect a gradual return from the crisis model of behavior to a more usual pattern, expect moderate growth in loans and overall consumption growth by 1.3% year-on-year.

Thus, the trajectory of growth in 1-1,5% is the most likely scenario for the coming years. It’s much better than a recession. But such growth our country can not be arranged.

However, to achieve a more significant economic acceleration, you need to “embroider” a narrow place. In other words, no matter how corny it sounds, we need structural reforms. The problem, however, lies in the fact that the popular reforms, such as tax cuts, have been conducted. Left to hold unpopular, such as pension reform raising the retirement age. These unpopular reforms are postponed, and this fact causes frustration, as carry out their will, and over time, the starting position is not getting better.

In addition to the prospects of economic recovery, many worried about rising prices. Once inflation has accelerated sharply in 2015, it has become a matter of universal concern. Indeed, in most countries, economic recession be associated with deflation. In a highly competitive market producers of goods and services are forced to lower prices to compensate for falling demand. In Russia about deflation. But the laws of Economics has not been canceled. And if we get inflation costs associated with, for example, increase of tariffs of natural monopolies, we see that inflation is slowing, and slowing fast. Early last year it seemed that inflation in 2016 will amount to 6-7%, But slowing inflation has exceeded all expectations. Now the consensus analysts ‘ forecast for this year suggests that inflation is much closer to 4% by year-end. This coincides with the inflation target of the Central Bank.

But consumer demand won’t grow in leaps and bounds, as sometimes happens with rapid recovery from the crisis. The way out of this crisis will be very gradual. Therefore, our forecast of inflation above forecasts of the Central Bank. However, the difference is quite small, within a single percentage point. The population will cease to consider the price rise as a serious risk in the future, more attention will switch to the rate of growth of incomes and salaries.

Increased interest in people is traditionally national currency. The dependence of the ruble on the price of oil remains clearly apparent. Moreover, in 2017, this connection may strengthen, because another important parameter, which determines the rate of the ruble, geopolitical tensions, according to our forecasts, will decrease.

In the coming year for the Russian currency, perhaps a few positive surprises. Baseline forecast of the Central Bank to oil price is about $40 per barrel. Our forecast for above — $50 per barrel. In 2014, the Central Bank, when in the second quarter, oil prices jumped, started buying dollars and euros, despite the fact that the declared policy of floating exchange rate. So on what level the Central Bank might intervene this time? Or he will not interfere and will allow the ruble to grow stronger? This question remains open.

In addition, we can surprise the price of oil. With new technology and the volumes of oil shale extraction they are unlikely to sustainably exceed $65 per barrel in the coming years, but the positive thing is that the prices may reach $60 per barrel rather than now suggested by the experts. This means that inflation may be below expectations, and growth is higher and the ruble stronger.

And the third surprise — we don’t know yet what will be the economic policy of the next us administration. We know how it behaves trump is a businessman, trump is a candidate, but do not know what will make trump-President. Whether selected political reboot of relations and easing of sanctions? The easing of sanctions will restore access of Russian banks and financial companies on the global capital market. And this, in turn, instantly affect the rate and levels of geopolitical risks in principle.

Of course, it is impossible not to take into account the possibility of negative surprises related to the turbulence in Europe or a hard landing of China’s economy, nearly everything is possible, as we have seen in recent years. But the positive surprises seem no less likely than the “black swans”. Let us hope that all swans this year will be white.

The author is Director of the Center for macroeconomic research of Sberbank

See also:

Foreigners are buying up rubles

The economic results of the 2016 and projections for 2017

Analyst Yulia tseplyaeva — about the middle class in the modern economy

The opinion of the author may not coincide with the position of the editorial Board