NRU HSE
Development Center
Sanctions, counter-sanctions and mid-term
prospects for the Russian economy
Natalia Akindinova
November 11 , 2014
1
GDP growth slowed down in 2013
Real GDP , Labor Productivity and Labor Contribution
(y-o-y, %)
2
Stagnation: the main factors
• Resource constraints as a result of the cessation of
growth in hydrocarbon prices and the stabilization in
physical volumes of external fuel deliveries
• Insufficient opportunities and incentives for growth on
the basis of productivity (lack of investment, weak
institutions)
• Inconsistency of economic policy
 From the one hand, the growth of state intervention
in the economy, huge defense budget and new social
obligations
 From the other hand, the “fiscal rule” and attempts to
improve an investment climate (“road maps”)
3
Sanctions made it difficult to refinance foreign debt
External Debt: Volume ($ billion) and Structure (%)
• During the third quarter of 2014 the external debt of banks declined by $
17 billion to $ 192 billion. The planned payments were $ 19 billion.
• External debt of enterprises was reduced by $ 27 billion to $ 422 billion.
The planned payments were $ 38 billion.
4
Counter-sanctions restrict the supply of goods…
Resources for 2013 domestic consumption in provision groups,
affected by Russian counter-sanctions (in real terms), %
5
… and lead to higher inflation
Prices indices (m-o-m, SA), %
6
Key economic indicators get worse
Exports, $ billion
The volume of exports was stable until the third quarter of
2014, then could fall under the influence of lower oil prices.
7
Key economic indicators get worse
Imports, $ billion
Devaluation and trade restrictions have led to a
decline in imports.
8
Key economic indicators get worse
Investment activity (100 = Dec 2010, SA)
Investments do not grow for more than two years due to financial
constraints, rising costs and deteriorating investment climate. In
January-September 2014 investment fell by 2.8%. Construction also
fell down.
9
Key economic indicators get worse
Real wages
Factors reducing real wages: cessation of productivity
growth, budget constraints, high inflation
10
Key economic indicators get worse
Household consumption (100 = 2012, SA)
The volume of food consumption is reduced under the influence of trade
restrictions and rising inflation. At the same time inflation and devaluation
expectations still support the dynamics of the non-food consumption, but this is
a temporary effect.
11
The mid-term prospects of growth depend on oil prices and sanctions
Scenario I (Sanctions / Low oil prices)
2015
2016
Inflation, per cent (Dec./Dec.)
-2.1
7.4
-1.4
5.2
Real household disposable income growth, per cent
-2.1
1.0
Retail trade growth, per cent
-1.2
-1.6
Investments growth, per cent
-9.0
-1.0
Exports, billion dollars
432
285
-114
43.9
-1.3
-1.0
85.0
427
285
-72
45.5
-2.0
-1.3
85.0
Real GDP growth, per cent
Imports, billion dollars
Net capital inflow/outflow, billion dollars
Источник:
Институт
«Центр
Ruble/dollar
exchange
rate (average)
развития» НИУ ВШЭ
Federal budget deficit, % GDP
Consolidated regional budget deficit, % GDP
Price for URALS, annual average, dollars per barrel
•
•
•
•
High net capital outflow, decline in exports, the depreciation of ruble
The negative dynamics of investment because of capital outflow and increasing risks
Increasing inflation and the decline in real income and consumer demand
Recession for two years, high fiscal risks
12
The mid-term prospects of growth depend on oil prices and sanctions
Scenario II (Sanctions / High oil prices)
2015
2016
Inflation, per cent (Dec./Dec.)
-1.6
6.6
-0.3
5.3
Real household disposable income growth, per cent
-1.1
1.4
Retail trade growth, per cent
-0.6
0.5
Investments growth, per cent
-5.0
0.5
479
305
-96
41.3
-0.1
-1.0
100.0
473
315
-76
42.3
-0.6
-1.1
100.0
Real GDP growth, per cent
Exports, billion dollars
Imports, billion dollars
Net capital inflow/outflow, billion dollars
Источник:exchange
Институт
«Центр
Ruble/dollar
rate (average)
развития» НИУ ВШЭ
Federal budget deficit, % GDP
Consolidated regional budget deficit, % GDP
Price for URALS, annual average, dollars per barrel
Recovery of oil prices improves the situation, but doesn’t solve the
problem.
13
The mid-term prospects of growth depend on oil prices and sanctions
Scenario III (No sanctions / High oil prices)
2015
2016
Real GDP growth, per cent
Inflation, per cent (Dec./Dec.)
0.8
5.8
0.5
4.8
Real household disposable income growth, per cent
0.8
1.8
Retail trade growth, per cent
0.4
1.8
Investments growth, per cent
0.5
2.2
494
313
-54
40.3
-0.1
-0.8
100.0
498
329
-41
40.8
-0.5
-0.9
100.0
Exports, billion dollars
Imports, billion dollars
Net capital inflow/outflow, billion dollars
Ruble/dollar exchange rate (average)
Federal budget deficit, % GDP
Consolidated regional budget deficit, % GDP
Price for URALS, annual average, dollars per barrel
•
•
•
Inflation is reduced by the cancellation of the food embargo and more
strong ruble.
Net capital outflow decrease but the economic growth is still weak.
Inefficiency of the economic model is maintained. To accelerate growth
huge reforms are required.
14
Thanks for your attention!
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