ALEXEY VEDEV: “LENDING DYNAMICS MAY WORSEN DUE TO THE DEEPENING CRISIS RESULTED FROM WIDESPREAD ANTI-RUSSIAN SANCTIONS"
Having received the report on the Central Bank's monetary policy, “Delovoy Peterburg” cites data showing that demand for loans increased in March and April, while the number of troubled borrowers did not noticeably went up. However, lending dynamics may deteriorate in the coming months due to the deepening crisis caused by large-scale anti-Russian sanctions, said Alexey Vedev, Head of the Financial Studies Department of the Gaidar Institute, at the International Congress of Financiers held in St. Petersburg in late April.
"The fact that our economy is heading for a massive crisis is simply obvious. I agree with the Prime Minister who told the Federal Assembly that this is a systemic crisis, the most severe in economic history. Most experts and officials believe that June-July will be the key months, because right now we are living on inventory as if nothing had happened. They are designed to last 2-3 months. We are totally unprepared for this crisis. For the last 10-15 years, the country has been incorporated into the international chains of the division of labor. Moreover, we have been developing industrial assembly since 2008. As a result, the structure of Russian imports has remained fairly stable over the last 15 years. 30% were final consumption goods, 30% investment imports, machinery and equipment, and 40% were components. That is, 70% of Russia's imports, which will now close, represents direct involvement in the development of economy. Investment in Russia is about Rb 25 trillion a year, of which 8-9 trillion is exports of machinery and equipment. The rest is buildings and facilities and what is around them. If the import of machinery and equipment closes, then you can imagine what will happen to investment. They will drop by 40% this year, if not more. It is a disaster. As for the import substitution, experience showed that since 2014 it is going well under foreign investment and foreign business owners. In other cases, it is not going at all," Alexey Vedev said at the congress.
According to Alexey Vedev, while most experts predict a 10-12% fall in the Russian economy this year, coupled with a 10-12% fall in the household real disposable incomes. "In contrast to the official forecasts expecting some kind of stabilization in 2023-2024 and achievement of 2% growth, I just do not see it. We are falling and falling steadily for quite a long time. Total sanctions will result in a maximum simplification of our economy. We will have a constant trade-off between security and efficiency. By all means, it is safer to do everything ourselves, whereas the entire global economy is built on division of labor," the expert added.
According to Alexey Vedev, while most experts predict a 10-12% fall in the Russian economy this year, coupled with a 10-12% fall in the household real disposable incomes. "In contrast to the official forecasts expecting some kind of stabilization in 2023-2024 and achievement of 2% growth, I just do not see it. We are falling and falling steadily for quite a long time. Total sanctions will result in a maximum simplification of our economy. We will have a constant trade-off between security and efficiency. By all means, it is safer to do everything ourselves, whereas the entire global economy is built on division of labor," the expert added.