ALEXEY VEDEV: LIVING IN FINANCIAL AND ECONOMIC UNCERTAINTY
In 2022 Russia faced a totally new economic reality. The unprecedented external sanctions and withdrawal of many Western companies from the Russian market have caused an economic downturn and crisis. Alexey Vedev, Doctor of economic sciences, Head of Financial Studies Department of the Gaidar Institute, interviewed by a business magazine ”Invest-Foresight”, talked about living in financial and economic uncertainty.
– Alexey Leonidovich, please tell us if today can be called a period of financial and economic uncertainty? Or is this not the case?
– I believe that today is indeed a period of financial and economic uncertainty. However, it is completely artificial accompanied by rather voluntaristic internal developments. The most recent example is the cards of our payment system, the MIR. Now they are accepted by friendly countries, now they are not. Such examples are numerous. Moreover, this uncertainty relates to obscurity. What further sanctions will be, what actions will be taken and how the situation will change. Even if something started working, it is not certain that the positive component of this "work" will continue for any length of time.
– Is there any winning strategy for financial and economic behavior today in such an environment?
– No, such a strategy does not exist. There is probably only one strategy. It is also rather ineffective and aims to lay down all risks and uncertainties in any strategy.
– If there is no any specific behavior strategy at this time, can you outline in a nutshell what financial actions in the area of "personal economy", so to speak, should be avoided?
– There is no doubt that it is necessary to abandon medium- and long-term planning or to do it extremely tentatively using some enlarged trends. This is the first point. The second is to stick to a well-thought-out system of payments which is tied to all possible risks. Furthermore, it is essential to move away from market risks, such as fluctuations of exchange rates, cost of shares, bonds and securities. This, of course, also has to be taken into account.
– This means that at the philistine level it is not a good idea to enter the stock market right now, isn’t it?
– I would prefer to wait. Indeed, we saw a certain stabilization before 21 September after the shock and we are now observing the stock market collapse.
– What steps do you think the authorities need to take to bring this unstable economic period to an end? Anyway, can these steps be realistically taken or do we just drift to the waves?
– This is quite a challenging issue. Basically, the government has developed a set of measures related to overcoming the consequences of the sanctions’ regime. This package is being implemented today, some successfully, some not. I do not think one can come up with anything better than what is successful at the moment.
– Will we as a country be able to get out of this situation on our own, or will we have to look for strong allies?
– I think it is realistic to get out. Moreover, the economy will continue to develop. The problem is to really minimize all possible risks, that is the first thing to do. Second, unfortunately, global experience is not sufficient to be used in our case in any way.
– Thus, we will essentially have to stewing in our own juice, wouldn’t we?
– Yes. And make decisions as the situation evolves.