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Moscow- It is unlikely that the Russian economy will be able to repeat the recovery in Economic growth What it achieved last year, on the contrary, it will suffer a clear decline in the current year, as concluded in a report recently issued by the Institute of Economic Forecasting of the Russian Academy of Sciences.
According to the report, the growth rate of industrial production is expected to decrease, for example, in next April and May, 3 times compared to last year’s indicators.
The conclusion issued by the most important center for economic studies in the country is in contrast to the results achieved by the Russian economy last year, in which growth exceeded gross domestic product The rate of 3.5% came as a surprise to many.
It converges with the center in this conclusion – albeit with slightly different estimates – International Monetary Fund Who had improved his forecast for Russian economic growth for the last three months of 2023 while lowering his forecast for 2024 from 1.5% to 1.3%.
This comes while Russian observers are also concerned about the possibility of a decline in Russian export revenues next year due to the decline in global oil prices and the slowdown in the global economy during the current year, not to mention the possibility of the country being exposed to a new package of Western sanctions.
Results exceeded expectations
Last year, Russia achieved results that even exceeded the expectations of the Central Bank and the Ministry of Development, as well as the centers of economic studies. The president said Vladimir Putin His country's economy has become the best in Europe and has surpassed the German economy.
One year ago, the idea of a continued decline in Russian GDP in 2023 prevailed among economic circles in Europe, and the discussion at the time was not whether or not the decline would occur, but rather how much this decline would be, but the Russian economy showed a strong recovery, reaching 2019 levels.
Variation in dynamics
Economist Victor Lashon attributes the reasons for the expected decline in growth rates to reasons, including external factors, such as the accumulated global financial problems and the repercussions that the decline in exports and oil prices will cause, which will directly and significantly affect the trade balance to the point of deterioration.
But the main factor, as Lashon explains in an interview with Al Jazeera Net, is the decline in imports due to the weakness of the ruble expected in the fall and the slowdown in domestic demand under the influence of tightening monetary policy.
For reference, the Central Bank raised the main interest rate to 16%.
Lashon continues that if in the beginning there was an exaggeration in estimating the negative effects of sanctions on the economy, the equation was then reversed and turned into a process of underestimating and belittling the impact of sanctions. But the reality will change during the current year, and the impact of the restrictions will become more tangible.
Hybrid scenarios
However, it is believed that the aggravation of the American conflict with China and the possibility of cutting off energy supplies to China from the south (from Africa, the Middle East, and Australia) will be in Russia’s interest and strengthen its economy, as this step will constitute a serious threat to the world’s factory (China) and will leave the entire world without any products.
It is likely that Russia will benefit from this radical scenario, because it will be prepared to supply China with oil and gas in large quantities, which would make Beijing more willing to build the giant gas pipeline “Power of Siberia – 2”.
Geopolitical reasons
Vladimir Olychenko, an expert at the Higher Institute of Economics, believes that the continuation of the Ukrainian conflict constitutes the main source of risks for the Russian economy.
Speaking to Al Jazeera Net, Olychenko pointed to “external risks” mainly related to the new sanctions and tightening of current restrictions. This could significantly distort the balance of foreign trade, as a result of the lower oil price ceiling and the new ban on Russian exports, and the subsequent decline in export revenues and even imports, if “friendly countries” tighten borders and controls on re-export.
Moreover, there are internal risks of a potential increase in political unrest in the run-up to the presidential elections scheduled for next March, as well as a broader escalation of the Ukrainian conflict.
Revenue nerve
Olychenko says Ukraine has already closed the pipeline on the southern line, and supplies only pass through the northern branch. Also, supplies to Europe via the Turkish Torrent almost stopped in 2023.
He continues that this was an attempt to prevent the transit of gas by imposing additional barriers (fees), which could lead to Russian gas becoming expensive and unprofitable to buy.
Olchenko also considers the scenario of a complete cessation of Russian gas supplies to Europe via the two pipelines (the Ukrainian and Turkish stream) as very likely, which could play an additional role in slowing the pace of economic growth in Russia.
According to his opinion, the United States will pressure Ukraine to prevent transit once the “heating season” ends, to remove Russia from the European pipeline market.
It is noteworthy that Hungary, which did not want to lose Russian gas, intervened against Bulgaria, which sought to impose an additional tax on the transit of Russian gas flowing through the Turkish stream at an amount of $111 per thousand cubic meters, and Budapest threatened that it would prevent Bulgaria’s entry into the Schengen area if it did so. .
