The authorities have admitted that the Russian economy has gone into a recession. The one who had the courage to do so was Andrei Klepach, Deputy Economy Minister; higher-ranking officials are not yet daring to utter the word. Experts' forecasts are still gloomier than official ones: in 2009 they do not rule out negative growth in industry. A faulty anti-crisis policy, not the state of the world's economy, is to blame for this.
Last Friday, Deputy Economics Minister Andrei Klepach said. "The recession in Russia has already started, and, I am afraid, will not end in six months' time". The Government downscaled forecasts for GDP growth from 6.8% to 6%, and for production growth, from 4.7% to 1.9%. Only the first six months will have a positive showing.
The financial sector, into which the government has pumped four trillion roubles out of the nine allocated by the state, looks comfortable, but does not hasten to issue loans - the banks grant them at sky-high rates. Difficulties in obtaining loans and falling demand are hitting the real economy, as in industrial performance is already showing. Despite official growth figures, it began to fall in October according to some analysts. Before the year is out, they expect a recession in industry. The Economic Development Ministry has reduced its GDP growth forecasts for 2009 to 3.5% at best and 2% at worst, the basis being lower oil prices than expected.
But even this forecast looks optimistic compared with what experts predict. The GDP will plunge by 4% and production by 6%, and this is the best case, believes the FBK consultancy. At worst, the GDP may fall by 15%. Igor Nikolayev, chief strategic analyst with FBK, said he would not forecast how deep industrial production would decline. He believes the economy's downturn could be deeper than in 1992, with many industries grinding to a halt: metals, construction, iron ore production, manufacturing, transport.
A production downturn results in less budget revenue and less social spending; last week Deputy Finance Minister Anton Siluyanov said the regional authorities would have to cut spending. The authorities, by declaring a recession, are preparing the population for the cuts, analysts believe. The population seems to be prepared for this: according to Levada-Centre, in Putin's eight years the number of Russians who describe unemployment as "acceptable" has increased from 17% to 30%. In the meantime, even Putin sees no hopes for the best on the labour market. "In October, the number of jobless reached 4.6 million, or 8% more than in the same period in 2007," he admitted at a EurAsEC summit on Friday.
Meanwhile, the situation in the Russian economy could have been better even despite falling resource prices, said Nikolayev. The authorities have made a strategic mistake in their anti-crisis policy. "When the crisis hit America, we were told it would not affect us," the analyst said. "When the stock market collapsed, we were still assured that only shareholders, brokers, and others would suffer, not the real economy. Time went on, but the authorities did nothing. It was only after the crisis spread to the real economy that the Economic Development Ministry said we were in a recession."
According to Nikolayev, it was not for nothing that the Ministry admitted a recession on Friday, of all days: "Anytime now, we will publish data on industrial production in November, including negative growth figures."
Lyudmila Novikova, Viktor Yadukha, Maria Selivanova, Tatyana Frolovskaya