What is the likelihood of an economic crisis in 2022? And what are the possible scenarios for it to develop?
– The national economy of the Russian Federation maintains a fairly high level of stability. There is no reason to come up with crisis scenarios, – says D.Economics, Professor of the Faculty of Economics Lyudmila Shkvarya:
– The onset of the economic crisis in Russia in 2022 can only be the result of very serious unfavorable force majeure circumstances, for example, an extensive lockdown. If this does not happen, then there are no reasons for the onset of the crisis: production is growing, import substitution is developing, which is confirmed even by Western “partners”, unemployment is decreasing.
All this suggests that there are no prerequisites for the formation of a “supply crisis”, i.e. deficit. On the other hand, the state has recently provided targeted financial assistance to families with schoolchildren, retirees, and the reduction in unemployment below the dock level and the growth of incomes means that there is no basis for the development of a “demand crisis”. Therefore, in my opinion, we have no reason to expect the onset of a crisis.
But there is also another point of view.
– The crisis caused by a reduction in demand, one way or another, will affect every sector of the Russian economy, every industry, – believes Candidate of Economic Sciences, Associate Professor of the Faculty of Economics of the RUDN University, Advisor to the Dean of the Faculty of Economics of the RUDN University on International Cooperation Maxim Chernyaev:
– The expert community is recording an increasing number of emerging economic “bubbles” that appear in almost all sectors of the world economy. In the near future, the rise in inflation and interest rates will naturally lead to a crisis on the part of aggregate demand.
At the same time, a close correlation between prices for energy resources and the Russian ruble remains. The monetary policy pursued by the Central Bank of the Russian Federation has a positive impact. An increase in the interest rate will allow the currency to maintain its position against the backdrop of growing inflation. At the same time, one should not forget that the strengthening of the currency runs counter to the interests of exporting companies, therefore, a strengthening higher than 5% should not be expected in 2022.
The crisis will affect all sectors, all sectors of the Russian economy, to the greatest extent – Russia. Roooona is the backbone fuel and energy complex. For the Russian Federation, the 4th quarter of the past year will be remembered for the unprecedented rise in prices for energy resources, in particular, for blue fuel. With the adjustment of supplies to the EU countries and the normalization of supply, the price will stabilize, the market will always adjust itself, but the sediment will remain in the form of risks, including the risk of a decrease in demand, which will inevitably lead to a reduction in energy prices.
– A crisis with a protracted drop in living standards will be in countries that have lived beyond their means. And Russia is not threatened due to the margin of financial strength and the increased level of self-sufficiency in a number of industries, – believes Alexander Abramov, chief analyst at Solidarity Bank:
– The volume of public debt in many countries, even before the start of the pandemic, was already at record levels. And, accordingly, it was impossible to increase the debt burden even more by market methods. There was a very aggressive stimulation of the economy during a pandemic, when incomes of the population in a number of countries not only did not fall, as is usually the case during a crisis, but rose sharply – precisely due to very large-scale aid programs from states. Most importantly, these programs were largely funded by the printing press. That is why we saw such an amazing situation, when during the crisis rates all over the world fell.
But, nevertheless, sooner or later you have to pay for everything. And by 2022, the Central Banks approached inflation, which in different countries is somewhere over 10%, somewhere over 20%, and in the leading countries it has stepped over 40%. Therefore, now we see an aggressive increase in rates by banks – both in developing countries and in a number of developed countries. There is no reason to expect that banks in the near future will abandon the tightening policy, especially in developed countries – there the tightening cycle is just beginning. Therefore, most likely, in the course of 2022, the financial and economic situation will become more complicated. The only question is, at what point will Central Banks decide that the cost of fighting inflation is too high and that stimulus measures will have to be resumed.
Usually, central banks make such decisions when the crisis has already manifested itself – there have been some major bankruptcies, turmoil in the financial markets, the economic situation has worsened. But, given that the Central Banks, as a rule, do not act proactively, then, most likely, we will see quite serious shocks in the world economy. And our Russian Central Bank in its forecast, in its main directions of monetary policy, presented four scenarios, two of which are crisis scenarios. This is a high inflation scenario and a financial crisis scenario.
“SP”: – How will this affect the Russian economy?
“Here we have more opportunities than threats. If there is a fall in energy prices, this will stimulate the process of import substitution. Over the past years, the state has accumulated enough reserves to implement such programs. But as for those countries that have lived beyond their means in recent years, and even decades, there will, of course, be a serious drop in living standards, and, most likely, a protracted one. Since these countries live in debt, and this debt becomes more and more every year. Therefore, most likely, there will be shocks on the world markets, but this will not affect the life of the Russian population as much as the crises, for example, the crises of 2008 and 2014, did.
Since the margin of financial strength, and the level of self-sufficiency in a number of industries has grown significantly. During this time, we have built a national payment system and are developing cooperation with other countries, so even if there are serious problems, for example, with the US dollar, we will be able to restructure and return to a normal economic track. We will carry out settlements in national currencies in case of problems with reserve assets. In general, no sharp drop in the Russian economy is expected.
– The foundation of the future crisis is low effective demand, which can be observed today, – believes Maxim Krivelevich, associate professor of the Department of Finance and Credit, FEFU:
– There is already a crisis. It is debatable only what to take as a starting point – 2010 – the last year of economic growth, or 2014 – the year of the next devaluation of the ruble and an increase in political risks in the economy. One way or another, from that moment on, the Russian economy has never once inspired reasons for optimism. There is also a plus in the protracted nature of the crisis – it does without significant collapses. However, the social consequences of the crisis should not be underestimated. It is likely that the continuation of the economic downturn will manifest itself as a reduction in life expectancy, primarily among men. Mortality from alcoholism and drug addiction will increase, families will break up more often. That is, a crisis is not a tsunami, but rather like a chronic flu that does not kill on the spot, but worsens the quality of life and possibly reduces its duration.
Continuing the analogy, the economy’s declining immunity is worrying. That is, the crisis is deepening. Because, actually, the economy is adaptive. And before the start of the coronavirus period, it was possible to celebrate some rather pleasant achievements of the Russian economy. Yes, good imported cheese has disappeared, but some of our own cheese has appeared. Some categories of imported goods have disappeared or have risen in price – quite tolerable domestic substitutes have appeared.
The indicators in the economy have worsened, the real opportunity to earn money has decreased, but citizens seem to have adapted, they began to take a second job and a third, they began to look for non-standard ways to earn extra money. And if a pandemic had not happened, such adaptation of citizens would have brought us somewhere in the region of the 2010 standard of living. Which is not very good, because other countries have gone far ahead during this time, but much better than the current situation. Plus “thank you” to the anti-crisis measures of the US Federal Reserve System for launching global inflation.
“SP”: – But the Americans are doing quite well with this, but when will this inflationary wave cover the Russians?
– In recent years, we have had a good situation: low interest rates on loans and predictable growth rates in prices have allowed the population to start thinking about the formation of their savings and loans. The level of financial literacy gradually improved, citizens understood the value of family budget planning and the formation of a long-term family financial policy. But now, if the inflationary spiral is restarted, all these gains will be lost.
It is normal for people to save: for schooling children, in case of illness, for old age, or just for a “rainy day”. But this is normal in the context of European inflation, if it is, conventionally, 3% per annum. And the attempt to save something at 20% inflation per year no longer seems reasonable. This is a bad story because people are trainable.
A person prefers to behave correctly if he sees that the right behavior is rewarded and the stupid is punished. If everything happens exactly the opposite, then he will not behave rationally. And this is very unpleasant, because the sources of the future crisis are being created today. They are in the fact that people exhaust the opportunity to work harder and lose motivation for a correct life – family, work – with the payment of all taxes, with an active life position. This is our future crisis.