ALEXEI VEDEV: A KEY RISK IS CONSUMER LENDING GROWTH
Alexei Vedev, Leading Researcher of the Gaidar Institute made a comment to the TASS News Agency in the context of the updated macroeconomic forecast of the Ministry of Economic Development.
In its forecast, the Ministry of Economic Development warned about the risk of recession in Russia in 2021 in case of a lack of measures to limit the growth rates of consumer lending. As per the estimate of the Ministry of Economic Development, in case of worsening of the situation in the sector of consumer lending the reduction of households’ expenditures on ultimate consumption may amount to 4.5% year on year in real terms. If it occurs the economy will enter the recession in 2021 and GDP will decrease by 0.6%.
Alexei Vedev agrees with the position of the Ministry of Economic Development. “I have been writing for two years and a half that growth in consumer lending is a key risk. In 2021, the risks of recession are even higher due to the fact that according to the plan of the Ministry of Economic Development and the Government this country should grow above 3%, but such prospects are nowhere in sight”, the expert stressed.
At the same time, the Ministry of Economic Development revised downwards the forecast of households’ real income growth in 2019 from 1% to 0.1% and that of the retail trade volume in 2020, from 2.1% to 0.6% year on year given that the expectations regarding real disposable incomes and real wages did not change much (both the indices are expected to speed up in 2020).
According to A. Vedev, this forecast of the Ministry of Economic Development is quite moderate and fairly optimistic. “Yes, quite moderate and optimistic [forecast] <...> It is clear that real disposable incomes will not grow, but it is better to state 0.1% than minus 0.5% and confirm that the living standard has been falling in Russia for six successive years”, the expert believes.
Alexei Vedev agrees with the position of the Ministry of Economic Development. “I have been writing for two years and a half that growth in consumer lending is a key risk. In 2021, the risks of recession are even higher due to the fact that according to the plan of the Ministry of Economic Development and the Government this country should grow above 3%, but such prospects are nowhere in sight”, the expert stressed.
At the same time, the Ministry of Economic Development revised downwards the forecast of households’ real income growth in 2019 from 1% to 0.1% and that of the retail trade volume in 2020, from 2.1% to 0.6% year on year given that the expectations regarding real disposable incomes and real wages did not change much (both the indices are expected to speed up in 2020).
According to A. Vedev, this forecast of the Ministry of Economic Development is quite moderate and fairly optimistic. “Yes, quite moderate and optimistic [forecast] <...> It is clear that real disposable incomes will not grow, but it is better to state 0.1% than minus 0.5% and confirm that the living standard has been falling in Russia for six successive years”, the expert believes.