On February 5, the press center of the MIA "Russia Today" hosted a presentation of the new issue number "Monitoring of Russia’s Economic Outlook in Russia" №2 (63), 2018.

The presentation was attended by Sergei Drobyshevsky, Academic Director of the Gaidar Institute, Alexander Knobel, Head of the International Trade Department, Gaidar Institute and Mikhail Khromov, Head of the Financial Studies Department, Gaidar Institute.

Sergei Drobyshevsky spoke about the main economic growth factors in 2017 and potential growth limitations in 2018. “First, the effect of the positive phase of the business cycle amid lack of economic policy supportive measures has ceased. Second, there is no observable effect on the part of the foreign trade: we do not expect growth in commodity prices. Third, there are no drivers of growth in the agriculture. During the past two years, the agrarian sector demonstrated good output results amid favorable climate conditions and it is less likely that it will be able to show better results than before for three years running”, said S. Drobyshevsky

According to S. Drobyshevsky, to underpin economic growth, structural reforms are required as early as next year and it suggests redistribution of the budget expenditures from non-productive budget items to productive ones, denationalization of the economy and liberalization of the foreign trade regulation (in particular, the customs and foreign exchange control).

In his address, Alexander Knobel touched upon the state of the balance of payments and noted that its stability determined growth in Russia’s trade balance surplus in 2017. Generally, the stability of the balance of payments was a driver of the rouble appreciation. However, with current trends both in the Russian economy and the global market of energy resources prevailing, Russia’s balance of payments and the rouble exchange rate will remain stable. If some growth in the annual average price of oil takes place, it will be set off by an increase in imports and higher foreign exchange purchases by the RF Ministry of Finance within the framework of the new budget rule.

One should not expect a stronger appreciation of the rouble which is going to be impeded by a decrease in the short-term foreign capital influx with further easing of the RF Central Bank’s monetary policy.

A. Knobel stressed that the effect of western countries’ sanctions on the Russian economy was diminishing from year to year and currently it stood at about 0.5–1% of GDP.

“Тhose sanctions which have been in force for a long period of time have made their contribution to economic growth rates. Probably, that contribution is shrinking from year to year. If in 2015 it was estimated in the range of 1% to 1.5%, at present, at 0.5% to 1%. In a few years, it will be possible to say precisely how sanctions affected the economic growth rates”, A. Knobel said.

Mikhail Khromov spoke about the situation in the Russian banking sector. According to him, it remains to be unstable. The aggregate profits of the banking sector are shrinking. In 2017, some bank assets and individual money market segments demonstrated positive dynamics. However, that process was accompanied by falling profits. Substantial volumes of poor-quality assets were identified with large banks which were going through financial restructuring.

Dramatic changes in bank revenues dynamics were driven by financial restructuring procedures started in August-September at large banks, such as FK Otkrytie, Binbank and Promsvyazbank. During financial rehabilitation of those banks, large high-risk assets were identified and adequate reserve provisions were immediately created.

The video is available at: http://pressmia.ru/pressclub/20180205/951847486.html