Citibank analysts rendered their verdict to the Russian economy
Citibank experts analyzed the state of the Russian economy and concluded that it will take two years to reach the pre-crisis level of growth. This was told by Ivan Chakarov, Chief Economist of Citi for Russia, Ukraine and Kazakhstan.
According to him, Russia’s GDP will decrease by 4.2% by the end of this year, and next year it will be able to increase by only 3.5%. By the beginning of 2022, the country’s economy will be at the level of the end of 2019.
At the same time, funds from the National Welfare Fund will be sufficient to finance budget expenditures only for three years providing maintenance of the oil cost at the same level. This is a more pessimistic forecast than the one presented by the Ministry of Finance. In mid-April, Anton Siluanov, Minister of Finance, assured that the allocated funds would be sufficient until 2024.
In addition, Citibank experts predicted the following features of the Russian economic recovery:
- The first stage will be similar to the post-crisis period of 1998. Initially, there will be rapid growth, after which the economy will face a slowdown due to the absence of factors contributing to development, namely a significant increase in the cost of oil, as well as an surge in the level of international trade.
- According to the results of the year, inflation may reach 4%, however, the general stagnation in economic activity will prevent it from accelerating. The refinancing rate can be reduced to 5%.
- The decline in the global economy may be more significant than in 2009. However, this won’t be as critical as at that time, because governments and central banks continue to pump funds into the economy.
- The main distinguishing factor of the crisis will be the rise of unemployment rate. However, in Russia this figure will probably be lower. Entrepreneurs will either fire employees to keep salaries unchanged, or keep jobs but cut salaries. It is more profitable for them to take the second variant.
- By the end of 2020, the price of oil may rise to $56. This will be facilitated by a reduction in production levels in exporting countries. However, as a result, it may return to $36 per barrel, which will be the lowest level since 2002.