First quarter research: salaries of Russians will decrease by 17%
VEB.RF analysts warned that according to the results of the second quarter, the incomes of Russians may decrease by almost a fifth. They are confident that in order to return to growth dynamic, it is necessary to introduce new measures to stimulate the economy, as well as make changes in the budgetary rule.
Due to the spread of the coronavirus, as well as difficulties in the commodity markets, the Russian economy is at risk of declining by 18% in the second quarter, and the earnings of Russians will fall by 17.5%, according to Forbes.
The policy brief was prepared and published ahead of the OPEC+ talks and is therefore driven by the ongoing price war between Russia and Saudi Arabia. But the difference between the forecasted oil prices during the price war and upon reaching agreements turned out to be insignificant – $34 and $39 per barrel, respectively. Also, the cost of oil will remain low during the quarantine.
According to the study, Russia’s GDP will decline by 3.8% at the end of the year, but experts predict a sharp recovery and growth of about 4-4.8% for 2021. This is the most positive scenario, provided that measures aimed at overcoming the crisis are implemented, thanks to which small enterprises will begin to increase their previous volumes from the middle of this year.
According to the results of the study, citizens’ incomes will decrease by 6.5% at the end of the year, which will be the largest collapse since 2014. Analysts also expect unemployment to rise from 4% to 7%, and its maximum values will be reached by the second quarter, when 10% of citizens involved in the country’s economy will find themselves unemployed.
Experts believe that the country needs new incentive measures to support the affected industries, namely air travel, the aviation industry and car manufacturers. In addition, it is worth expanding the program of concessional lending to small and medium-sized businesses, and tax debts should be completely written off. Analysts also offered to provide subsidies to organizations in order to preserve the salaries of employees in the affected companies.
In addition to urgent measures to support enterprises, it is also important to cope with the issue of easing financial policy like other developed countries, as well as capitalizing on development institutions at the expense of reserves from the NWF.