Oct 27, 2021
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“Black Swan” looks closely at Russia, wondering which place to pinch

Photo: Sergey Konkov / TASS

The Ministry of Economic Development does not exclude the appearance on the market of “black swans” – difficult to predict and rare events, which, however, can have very serious consequences. This is due, among other things, to the uncertainty of the inflation situation.

Earlier, the Ministry of Economic Development changed the forecast for the inflation rate at the end of the year – from 5.8% to 7.4%, explaining that the main contribution to this is made by food prices, in particular, the rise in prices for fruits and vegetables and meat products. At the same time, the department does not exclude that the forecast may be adjusted.

“Theoretically, the forecast will most likely be revised downward, but, on the other hand, there is a likelihood of some“ black swans, ”the Deputy Minister of Economic Development told Izvestia Polina Kryuchkova

At the same time, she admitted that it is difficult to predict where it will explode. The ministry believes that inflation will be influenced by the supply of agricultural products in the domestic market, world prices, the state of global supply chains, as well as the situation on the energy market in Europe. In the meantime, prices are growing, and now Russian producers of sausages, following the producers of pasta, warn of an increase of 7-20%.

The central bank, apparently, is also not optimistic: on October 2, it decided to raise the key rate by 75 bp, to 7.50% per annum, and indicated an even higher possible inflation rate.

“Inflation is developing significantly higher than the forecast of the Bank of Russia and by the end of 2021 is expected to be in the range of 7.4-7.9%,” the regulator said.

So where can we expect “black swans” and what surprises can inflation bring?

Independent Economist Leonid Khazanov believes that the “black swan” can fly from the global hydrocarbon market.

– Prices for oil and natural gas are now at their maximum levels due to the raging energy crises in the European Union and China. They can last for several months, while the cold season lasts, and then gradually decrease or, on the contrary, suddenly collapse under the influence of some factor, for example, the news about the reopening of previously closed coal-fired power plants in the European Union. In our turbulent times, anything is possible.

“SP”: – Could the growing epidemic of coronavirus have a significant impact?

– Undoubtedly, it can, because in Russia the number of people infected with Chinese infection is growing, and the pandemic is expanding abroad. The introduction of lockdowns, on the one hand, is designed to stop the spread of the disease, on the other hand, it can negatively hit the economy of our country. At the very least, the service sector may suffer serious losses due to the closure and suspension of the work of cafes, restaurants in Moscow and other cities.

However, there seems to be no other way, given how frivolous many people are about the threat of coronavirus infection. I myself go to the subway every day and see how many people do not “deign” to wear masks. Hence the jump in morbidity.

Much depends on how strong the quarantine restrictions will be, and how long and widespread they will be. If they are as long and tough as last year, then the Russian economy could definitely fail.

It can also be hit by the expected increase in food prices – the population will be forced to reduce their consumption, since I personally do not observe any tangible increase in their income. The rise in prices can ricochet not only in retail, but also in the food industry and further along the chain in agriculture.

“SP”: – How can the authorities restrain inflation and can they?

– It seems to me that it is extremely important not to allow the shutdown of factories and plants. To do this, it is necessary not only to restrain the rise in interest rates on loans from commercial banks, which is possible after the Bank of Russia has raised the key rate, but also to prevent an increase in tariffs for freight transportation and energy resources.

It would also not hurt to check the activities of retail chains, food and agro-industrial enterprises for the situation with their prices and costs. Especially hard it is necessary to grope the retailers, who receive sometimes fabulous profits against the background of low salaries of their employees, who are forced to “plow” from dawn to dusk in order to provide for themselves and their families. There are plenty of tools to contain prices, you just need to use them correctly.

As noted Strategy Director of Investment Company FINAM Yaroslav KabakovIn many respects, the Russian economy is a hostage to external economic risks: speaking of “black swans” and inflation, we largely focus on the risk of further growth in energy prices, problems with logistics and disruptions in the supply chain of components.

– Taking into account the huge number of factors and the possible realization of risks that can aggravate the current situation, it becomes rather difficult to predict the rate of inflation growth. In fact, the “black swan” is an event that initially seems rare and difficult to predict, but after the fact it often turns out to be quite logical, based on the current situation. In this regard, the monetary authorities are not able to fight inflation effectively, the main efforts will be aimed at stopping the problems arising from inflation, including capital outflow.

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