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Sep 14, 2020
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“With losses, but we survived.” Economist – on the consequences of the pandemic for Russia

Can the economy recover quickly from the coronavirus? This question worries both experts, analysts and businessmen, and ordinary citizens. On the one hand, most companies have entered work, the service sector, the tourism industry, and catering are on the rails. On the other hand, events such as pandemics do not go unnoticed. Will there be a crisis and will a second wave of restrictions await us? AiF-Yug answered questions economist Victor Poltoranin...

Has it gotten worse?

Tatyana Zakharova, AiF-Yug: Viktor Viktorovich, how did the coronavirus pandemic affect the economy of our country?

Victor Poltoranin: All states were affected by the pandemic. In Russia and before it, there were negative phenomena: a high tax burden, an increase in VAT, and it is planned to abolish the single tax on imputed income. Our economy needs to be developed more carefully, carefully, without resorting to measures that, on the one hand, allow us to replenish the budget, and on the other hand, hinder business development. Therefore, if we talk about the impact of the pandemic on Russia, it slowed down those processes that did not develop anyway.

But there are also more positive aspects. The pandemic has allowed the government to significantly lower insurance premium rates for small and medium-sized businesses. This innovation could stimulate its development.

Today observers, analysts and Rosstat note a decrease in the share of small and medium-sized businesses in our economy - already less than 20%. This suggests that the majority of the population works either in the public sector or in large enterprises. As a result, the income of the population does not increase, but rather decreases. Salaries in budgetary institutions are not large, and in large companies only top managers and founders have a high level of income. Performers usually get little. The situation could improve the development of small and medium-sized businesses. There, workers have the opportunity to earn above average income and contribute to the development of the market.

Another plus is that the state does not intend to curtail national projects. This is the injection of additional funds into the economy, and hence the support of consumer demand. People participate in the performance of work within the framework of national projects, receive salaries and spend them, thereby supporting the economy.

Krasnodar Territory is located in a more favorable zone than other regions. We have industries that have hardly been affected by the pandemic.

- Can we already say how much the economy has lost due to the pandemic? What areas won't be the same?

- Judging by the reports of the statistical bodies of different countries, it is possible: we are seeing a drop in the gross domestic product. In Russia, GDP fell by 8%. Ordinary people can feel all these changes by price fluctuations, the fact that some products, services become less available. The economy is shrinking.

As for which areas have undergone significant changes, these are trade, catering, tourism, culture. Theaters and cinemas are still closed, mass entertainment events will be excluded for a long time. As for the traditional sectors of the economy, such as manufacturing, mining, construction, medicine, education, then enterprises continue to function as before. They adapt to new conditions and carry out their activities, often even increasing their volumes.

Has the agro-industrial complex pulled out?

- How does Kuban look like against the background of others in terms of the consequences of the pandemic?

- Krasnodar Territory is located in a more favorable zone than other regions. We have industries that have hardly been affected by the pandemic. Firstly, even the sanatorium-and-spa sector, which was one of the first to be hit, received access to work. The influx of tourists that we are observing made it possible, at least partially, but still to restore the resources that were overspending during the pandemic. Secondly, our agro-industrial sector is a producer of those products that will be in demand under any circumstances - food.

Thirdly, we have export potential. Kuban is the leader in the export of wheat and other foodstuffs. This means that the regional budget has stable receipts. At least in these areas, the situation is favorable. In addition, we are a transit route in relation to Crimea. Streams of tourists, motorists use services and generate income. Consumer demand in the region is also fueled by the migration flow - people who move here from the north of the country. They spend money in the region, thereby replenishing the budget: at the expense of taxes from organizations that provide services to them and sell goods. This is also an advantage that most regions cannot boast of.

- There are fears of a second wave of the pandemic. In your opinion, if it does, how will the economy meet it? Did business and citizens manage to adapt to the new realities? Have we returned to pre-quarantine spending?

- If we theoretically imagine the second wave, then the regime that the government has chosen to support the population, namely non-working days with salary retention, will be difficult or even impossible to reapply. Because those reserves or opportunities to attract loans, borrowed funds will no longer be used in such a volume. Then the number of closed enterprises will exceed the number that we observe now. As for the opportunity to adjust and retrain, to change the work format, there are such opportunities. Due to the coronavirus, there has been a restructuring of working methods. In particular, the distance format appeared. Employees of enterprises, whose goods and services will be in demand, are not afraid of shocks.

Now about spending. If we focus on statistics, the state of affairs is favorable. The drop in demand is estimated in single digits - about 7 - 9%. For an unusual, unusual situation, in the form of a pandemic, this is an illustration of the fact that demand has not collapsed. This means that the population continues to spend. For the region and business activity has not dropped dramatically. Enterprises work, people go out to fulfill their duties, a certain adaptation to the situation has occurred. The new conditions did not cause a radical drop in income and, consequently, in consumer demand, which is very important for the economy.

Small business: to be or not to be?

- And, nevertheless, the number of unemployed has increased. According to official data, the unemployment rate in the country at the end of August 2020 was 3.46% (at the end of August 2019, this figure was 0.39%). How to return the state of the labor market to the previous one?

- Where can the unemployed get a job? They can take low-paying jobs, which is not attractive to most of them. They can apply for work in budgetary organizations, which is not always possible in conditions of a reduction in the number of the state apparatus. You can try to get a job in large companies, where a stable salary and operating conditions do not depend on economic turmoil. However, the number of these companies is limited, and their staff is usually staffed. It turns out that you can apply for a job in limited formats: either count on opening new areas of production or government organizations, or become self-employed or participate in small and medium-sized businesses. But here again we return to where we started the conversation.

We need favorable conditions from the state: tax breaks and vacations, support, protection of enterprises from unreasonable claims from government agencies, tax authorities, and supervisory authorities. An improved business climate will enable the development of new activities. After all, there are prerequisites for this. Import substitution makes it possible to expect that Russia will produce products that are imported from abroad by small and medium-sized enterprises. But future entrepreneurs need to be sure that their work, even if it does not bring income, because not all startups are successful, they will be able to switch and start over without losing their entire fortune. Today, a lot of risks await those who decide, having lost their job, to start their own business. There is also a complex tax system that requires the involvement of a specialist - an accountant. Here is the connection to resources: gas, electricity. It takes time to access them. Both consumers and regulatory authorities can drive a budding entrepreneur to bankruptcy. So starting a business is difficult today. People who have lost their jobs are experiencing greater difficulties in finding than 10-15 years ago.

- Since the beginning of the pandemic, many companies have transferred their employees to a remote mode of work. And soon a significant part of employers and employees recognized the advantages of this format. How do you think the labor market will change in this area?

- A large category of employees nevertheless gladly started to perform their duties offline. At the same time, the very fact that the remote system for fulfilling work duties has begun to develop indicates a high level of management personnel who ensure the implementation of this method. After all, it is not enough just to announce a remote job, you need to create conditions for such work, as well as create a control system that will ensure a constant result: to release products or provide services in the same volume. From an economic point of view, this requires the involvement of more qualified managers.

Lost but on my feet

- What has the pandemic taught us?

- If we talk about macro-consequences, we need to continue to pay attention to the health care system, the prevention of epidemiological consequences. As for ordinary citizens, you probably need to have supplies, as they say, for a rainy day. Ideally, receive income from more than one source.

If earlier researchers said that a financial safety cushion should provide for the ability to exist without compromising the quality of life from 1.5 to three to four months, now they call longer periods.

- What will happen to the ruble by the end of the year? Are there any predictions?

- It's hard to make predictions. On the one hand, there are no fundamental factors and reasons for the stabilization of the ruble. The economy did not turn to growth. On the other hand, since the situation at the global level is approximately the same, all countries are in an unfavorable zone for business, then there is no reason to talk about the fall of the ruble either. There may be fluctuations associated with the speculative component. I do not exclude the fact that the state uses the ruble exchange rate to restore budgetary savings, regulating the level of foreign currency purchases on the market.

- And yet the crisis will come?

- I don’t think so. The pandemic has taught both employers and workers to adapt. Those who have ceased their activities, have lost their jobs are in search. The algorithms of action are clear to find it and get income. If serious unrest, the next waves of a pandemic do not occur, then there will be no new mass closings of enterprises, the economy will cope with the existing difficulties, albeit with losses. And yet, Russia's macroeconomic indicators show a declining dependence on the global economy. Of course, one cannot be completely independent, but there is no need to talk about a significant budget cut.

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