ALEXEY VEDEV: CONSEQUENCES OF THE FAILED OPEC+ TRANSACTION HAVE A FULL IMPACT

Alexey Vedev, Head of Financial Studies Department of the Gaidar Institute for Economic Policy, shared his thoughts on the impact of the oil market decline under spread of coronavirus on households’ incomes.
Expert of the Gaidar Institute noted: “Real disposable incomes of households are not growing over six years. Therewith, inflation has undoubtedly reached its historical minimum, i.e. about 2%. The major factor of low inflation is, by all means, low demand. Therefore, chains and shops will maintain prices preventing their growth as long as possible, however, it will last no more than one month, long enough to disallow the loss of the market share.”
As a result of the failed OPEC+ transaction and decline in the global oil prices as well as Ruble devaluation, price adjustment might be possible for certain groups of goods.
“Do not forget that 40% of the Russian imports consist of component parts. Therefore, even TV sets, washing machines, cars produced in Russia, will get more expensive because the share of component parts is rather high, i.e. from 30% to 90%”, Alexey Vedev concluded.


Wednesday, 01.04.2020