Aleksey Vedev: I do not trust declarations that correlation between oil price vs Russian economic growth weakened.

On November 21, Aleksey Vedev, Leading Researcher of the Gaidar Institute, took part in the round table discussion organized by “Banking review” journal and  portal dedicated to consideration of main trends which will influence on future Russian economy or have already shown themselves at present.

Oil prices, ongoing sanctions wars, tax maneuver, sustainability of banking system were major topics of the discussion.

Taking into consideration situation at the oil market, discussion started exactly with consideration of “black gold” prospects and correlation of oil prices against status of Russian economy. At the beginning, Aleksey Vedev notified that he had never forecasted two things: oil price and US Dollar/Euro ratio though he hoped that fall of oil prices would not be that dramatic. Aleksey Vedev said: “At the same time, I do not trust statements that correlation between oil price and Russian economic growth weakened. It weakened only in the sense that we are not growing along with growth of oil prices. However, I am confident that we will fall badly if quotation prices go strongly down. This is one of the key risks for economy as 75% of Russian export is primary goods and energy”.

Evaluating the impact of sanctions on the country’s economy, experts agreed on a rather paradoxical opinion that “if sanctions did not exist, it would be worth to invent them”. Nevertheless, Aleksey Vedev underlined that from the point of technological progress sanctions were really effective. He added: “When we talk about direct foreign investment which I consider to be major factor of sustainable economic growth, we are cut off from them to a large extent. It is not only money, it is also corporate management and technologies, etc.” 
Contemplating on the VAT increase to be in force from next year and experimental introduction of tax for freelancers, expert of the Gaidar Institute said that he took part in the consideration of tax maneuver as a tool to stimulate Russian economy and a switch to investment model of growth held by Centre of Strategic Studies in 2016–2017.
According to Aleksey Vedev, the latest tax initiatives prove that economic objective to grow at a pace similar to the world average is in State hands. In other words, the State accumulate resources and act as principal investor. At the same time, economist named current budget policy as extremely tough and absolutely discouraging. Expert of the Gaidar Institute summarized: “In three years, the State will have a surplus budget. Already this year we may see excess of incomes over expenditures. One may have lengthy debates whether it is good or bad but it means only one thing that the State withdraw from economy more than it provide. It seems strange to run a budget surplus at 3% of the GDP with the economic growth being at a level of economic error”.
Talking about issues of banking system, Aleksey Vedev underlined that one of principal claims against Bank of Russia is lack of development strategy of the banking system. He explained that: “Society should be aware what kind of banking system we build. May be it will consist of two state banks? Fine. Or it will be a three-tier system with regional banks or banks having a limited license? Could be the case. However, it has to be discussed, agreed upon and this strategy has to be realized. We do not have any program documents containing structural, target and other indices”.
Meeting was also attended by Konstantin Korischenko, Head of the Chair, Security Markets and Financial Engineering, RANEPA Department of Finance and Banking, Ilia Pokamestov, UniFactor General Director, Iaroslv Kabakov, Assistant Professor, Financial University under the Government of the Russian Federation, Deputy General Director, IC Finam, and Elman Metkhiev, independent expert. Pavel Samiev, BusinessDrom General Director, and Dmitry Bzhezinsky, Editor-in-Chief, portal, moderated the meeting.