Economics experts: Crisis in Russia will last until 2020

Baku. 30 March. REPORT.AZ/ Development center High School of Economy has published the economic forecast up to 2020, predicting continued recession in Russia even under relatively optimistic scenario in the world commodity market, falling incomes and the struggle for business survival.

Report informs citing the BBC, the rise in oil prices to 50 dollars per barrel could facilitate the process of adaptation of economy to new conditions, but will not go to a steady (albeit modest) growth before 2020, the document said.

«The projected continued recession will lead to the fact that the decline in real incomes will continue for a period of one to three years», — quotes«Interfax»forecast «Centre of development».

«Current trends and political constraints hinder the departure of the economy from the current depressing trajectory, however, reserve the loyalty of the population to the deterioration of the standard of living is not unlimited and may be exhausted in the future. Together with the growing discontent polyarchenko business it will create a pressure to change domestic and foreign policy», — said analysts of the «Center of development».

Experts from the HSE consider two scenarios. The first involves the preservation of price of oil Urals at level of $ 35 per barrel up to 2020, the second comes from the price increases to $ 45 per barrel in 2016 and stabilize at the level of 50 in 2017-2020.

Both scenarios proceed from the preservation of the existing sanctions regime, as well as current trends in domestic economic policy.

At 35 dollars per barrel, the GDP decline in 2016 is 1.6%, says the review. The reduction of spending in real terms will reduce the budget deficit from over 4% of GDP in 2016 to 1% of GDP in 2019-2020, but only at the cost of suppressing domestic demand. The total fall in GDP for the 2015-2019 may be 8.1%, and the recession will continue until 2019. By the end of 2016, GDP will decline by 1.6%.

With oil at $ 45, the fall in GDP in 2016 will reach 0.8%, the budget deficit to 2.7% of GDP with further reduction to one percent of GDP. The total decline in GDP over 2015-2019 in this scenario, analysts valued 5.6%.
Public sector wages for 2015-2020 will be reduced (depending on the scenario) on 22-30% in real terms. This will decrease the amount and quality free of charge fiscal services.

Russian business in the medium term is more likely to survive than to develop new industries, says the review. This, in their opinion, is connected with the continuation of economic adjustment and budget the decline in external revenues and the resulting depth and duration of recession.

According to the Ministry, in January-February 2016, Russia’s GDP decreased by 1.6% compared to the same period in 2015. The head of this Department Alexey Ulyukayev expects that the decline in GDP in annual terms will cease by the third quarter and the second half will show growth, but on the whole, the economy is expected a slight decrease. In the scenario at 40 dollars per barrel, Ulyukayev expects a decline of Russia’s GDP in 2016 in the range from zero to 0.5%.

The Central Bank in its base case scenario with 30 per barrel predicts the fall of GDP in 2016, 1.3% and 1.5%.