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Thursday, February 22, 2018

Statistics: Russian economy falls rather than POPs up

Vladimir Putin, speaking at the Congress of “Business Russia”, he reassured Russian businessmen, saying that the economy has stabilized and it remains only to reach a sustainable growth rate. And the government has a similar view. They say that the economy has reached a growth trajectory. What to say? Only Lenin about Herzen: “they are terribly far from people.” How tall when everything is falling? Rosstat witness. According to him, in September the index of industrial production in Russia fell 0.8%, cutting the recorded increase in August. Moreover, the rate of decline of industry was highest in the last eight months.

photo: Alex geldings

The Russian President, speaking at the Congress of “Business Russia” looked optimistic. He spoke about the economy in the most positive in the current situation colours. “We managed to stabilize the economy, but the goal we have, of course, wider and more steady growth”, — said Vladimir Putin.

However, he said that “it is necessary to find new instruments and strengthen the effectiveness of startup support measures”. “In this connection I propose to discuss how to ensure mechanisms for promoting exports, to increase the availability of credit resources, to build relations of private business and public companies”, — the President added.

Moreover, Vladimir Putin arranged a meeting of businessmen and gave a hint on possible structural reforms in the future. “Freedom of conducting business — the best answer to external restrictions,” he said.

By the way, a few hours before Putin’s speech, the Ministry of economic development re-adjusted macroeconomic forecast and now expects GDP growth in 2017 by 0.6%, in 2018 — by 1.7% and in 2019 — by 2.1%. Previous forecast said the growth respectively of 0.2, 0.9 and 1.2%.

How realistic these forecasts — one can argue. For example, the international monetary Fund expects that in 2017, Russia’s GDP will grow by only 1.1%.

You can argue long about the bottom of the crisis: we felt it or not, started from the bottom or pushed. Leave time to these conversations. Remember only one thing: the main indicator of the health of any economy is GDP. As we have it is negative, and therefore GDP continues to fall, though not as fast as last year, but still.

Why is this happening? The fact that the key factor affecting GDP is industrial production. And it rests on three pillars: mining, processing productions and production and distribution of electricity and water. According to Rosstat, in September compared to August showed a growth of domestic industry by 1.8%. Commendable. Nine months of this year compared to the same period of 2015 — a modest 0.3%, but still in the black. But in September 2016 by September 2015 shows a drop of 0.8%. So we fall rather than float.

And the reason for the September decline was the decrease in output at factories, factories and other enterprises related to the segment of manufacturing industries, which Russia hopes to make a bid to overcome crisis and achieve independence, the budget revenues from hydrocarbon production. In comparison with August 2015, the result fell by 1.6%, while mining and quarrying grew by 2.1%, while the production and distribution of electricity, gas and water — by 1.4%.

It is possible that officials are not quite sure of themselves. Maybe that’s why the same day Dmitry Medvedev has instructed the economic development Ministry to submit by 1 December of this year a concrete action plan of the government to ensure sustainable socio-economic development at least 2017. “How should continue next year. Entrepreneurs invest less in fixed capital, and for individual sectors, including construction. It is necessary to analyze what should be done to change these negative trends so far as we are able to influence it. Need to find out what activities we have planned, failed due to objective reasons, which failed due to insufficient energy at work and what can be done in the near future”, — said the head of government.

There is a hackneyed saying: “Prepare sleighs in summer, and in winter the cart”. Now autumn, winter is on the nose. Why did Medvedev give such orders now, although it had to work months earlier?

Financial crisis. Chronicle of events

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