ALEXEY VEDEV: “JUNE WILL BE THE X-HOUR FOR RUSSIA”
Alexey Vedev, Head of Financial Studies Department of the Gaidar Institute, shared his views with ”МК” regarding the forthcoming transformation of the Russian economy.
Analysts of the Central Bank reported in the latest issue of “What the Trends Say” bulletin that sanctions-induced economic crisis in Russia will under any scenario surpass the depth and duration of the coronacrisis recession of 2020. The main thing they warn in their report is that structural transformation of the economy will be accompanied by a technological setback. Notably, it will concern all those sectors that make their best efforts to utilize the state-of-the-art foreign technologies or have reached a high level of digitalization. In particular, the engineering and electronics industries are at risk.
The country will enter this qualitatively new reality already in Q 2 or beginning of Q 3, that is, in June. During the first, adaptation stage, the main task will be to find alternative suppliers and to carefully use stocks (including financial ones). Problems will exacerbate due to the lack of spare parts and service. During this period, the state should assume some of the financial risks and reduce taxes for entrepreneurs.
Then, given the continuing sanctions, the role of small intermediary foreign trade companies and "shuttle" small businesses, especially in the consumer segment, will increase. They will be involved in arranging supplies from alternative foreign suppliers. In a sense, the economy will return to the well forgotten 1990s, an exuberant and impoverished era of half-room-sized checkered bags full of Turkish and Chinese consumer goods.
"The sanctions impact has not yet been felt, as shops have stockpiles which are being dealt with. However, as stocks are dwindling rapidly, the Russians will face an "X -hour" already in June. At that point it will become clear whether sanctions have had a drastic effect on the economy and whether they can be circumvented in some way. For example, by arranging supplies of components via third countries," believes Alexey Vedev.
There was information that Essity, a Swiss company producing personal care and health products, will leave Russian market. It owns such brands as Zewa, Libresse and Libero, reminds Alexey Vedev. He believes that these products will not disappear from the shelves in the next couple of months, as dozens of warehouses are stocked. It is not clear what will happen next.
As for prospects of the shuttle business, one thinks of Zara T-shirts and some final consumption goods at the best. The key question today is what to do with investment imports: machinery, equipment and components for industrial assembly. It is clear that “shuttle traders” will not solve this issue, the expert said.
The country will enter this qualitatively new reality already in Q 2 or beginning of Q 3, that is, in June. During the first, adaptation stage, the main task will be to find alternative suppliers and to carefully use stocks (including financial ones). Problems will exacerbate due to the lack of spare parts and service. During this period, the state should assume some of the financial risks and reduce taxes for entrepreneurs.
Then, given the continuing sanctions, the role of small intermediary foreign trade companies and "shuttle" small businesses, especially in the consumer segment, will increase. They will be involved in arranging supplies from alternative foreign suppliers. In a sense, the economy will return to the well forgotten 1990s, an exuberant and impoverished era of half-room-sized checkered bags full of Turkish and Chinese consumer goods.
"The sanctions impact has not yet been felt, as shops have stockpiles which are being dealt with. However, as stocks are dwindling rapidly, the Russians will face an "X -hour" already in June. At that point it will become clear whether sanctions have had a drastic effect on the economy and whether they can be circumvented in some way. For example, by arranging supplies of components via third countries," believes Alexey Vedev.
There was information that Essity, a Swiss company producing personal care and health products, will leave Russian market. It owns such brands as Zewa, Libresse and Libero, reminds Alexey Vedev. He believes that these products will not disappear from the shelves in the next couple of months, as dozens of warehouses are stocked. It is not clear what will happen next.
As for prospects of the shuttle business, one thinks of Zara T-shirts and some final consumption goods at the best. The key question today is what to do with investment imports: machinery, equipment and components for industrial assembly. It is clear that “shuttle traders” will not solve this issue, the expert said.