Aleksey Vedev, Doctor of Economic Sciences, Head of Financial Studies Department of the Gaidar Institute for Economic Policy, commented to Interesting Russia the Ruble devaluation against the COVID-19 outbreak and crash of the oil market.
Widespread of the infectious disease led to a significant Ruble devaluation as well as to high losses for local tourism operators and airlines. In this context, strengthening of the US currency against the devaluation of the Russian one will contribute to the increase in prices for services and goods in the Russian Federation.
Among measures announced by the Prime Minister, there are tax holidays for travel agencies and airlines, as they were the ones who suffered the most damage. In addition, the simplification of the import of certain goods is considered.
In this regard, Aleksey Vedev reminded “of a 25% increase in the costs of the Federal Treasury following the results of 2 months of 2020”, serving as proof that authorities switched to promotion policy.
“Mishustin’s team began to show higher efficiency,” said the expert.
According to Aleksey Vedev, “budgetary expenditures may turn out to be the main determining factor in the economy in 2020”.
Aleksey Vedev also noted, “that airlines and travel agencies could not boast of high profits even in good times. Now, although they will be provided with state subsidies, their insecure situation will cause additional challenges for the entire national economy”.
According to experts, if financial crisis breaks out, then the income of Russians will decrease by 2% of GDP. At the same time, salaries in private sector will drop by 10% while salaries and wages in public sector and pensioners' benefits will not experience changes. In addition, there is a high probability of a slowdown in production and shortage of skilled personnel.