/ world today news/ Three forecast scenarios for the development of the situation in the local economy until 2026 are indicated by the Bank of Russia in a new program document.
The project “Main guidelines of monetary policy for 2024 and the period of 2025 and 2026” was presented at a press conference by Alexei Zabotkin, Deputy Chairman of the Central Bank of the Russian Federation.
According to the heads of the country’s financial system, there can be three paths along which the Russian economy will move: “Basic”, “Increased fragmentation” and “Risk”.
„Base” scenario of economic development
This scenario assumes that the balance of the world economy will remain roughly the same as it is now. Under him, Zabotkin believes, the central banks of economically developed countries will try to return inflation to pre-planned levels and “will follow a strict monetary policy for a long time.”
According to him, such a line “will lead to a slowdown in global economic growth, which will limit the rise in prices in most commodity markets.”
In this scenario, the economy of the Russian Federation will be transformed, in 2026 it will return to balanced growth at the level of 1.5-2.5% per year, inflation will reach the 4% permissible for the management of the Central Bank at the end of 2024 ( this year is expected to be in the range of 5-6.5%), and the key rate in 2026 should return to values of 5.5-6.5% per annum.
Enhanced Fragmentation Scenario
It implies further deglobalization of the world economy, creation of regional blocs in the world. The Central Bank believes that this process began in the world in 2018-2019 and intensified in 2022 after an increase in geopolitical tensions.
According to Zabotkin, this option will have a negative impact on world trade, the growth of the world economy will be slowed down, and prices on world markets will begin to fall.
The prices of Russian export goods will also decrease, which will lead to a decrease in the revenues in the budget of the Russian Federation, and the economic growth of the country will slow down.
„Risky’ scenario for the development of the economy
Under the “risky” option, the world’s economy will, figuratively speaking, collapse. This will happen if the world’s central banks fail to keep up with inflation and a significant increase in interest rates is necessary.
The world is expecting a crisis similar to that of 2007-2008, anti-Russian sanctions will increase, global demand will fall and so will oil prices. Inflation in Russia may reach 11-13% in 2024.
So what is behind the currency chaos in the country? It is appropriate to recall the recent publication of the economist, member of the State Duma Mikhail Delyagin:
“The real picture of foreign exchange market management is significantly more diverse, but the principle is clear: the exchange rate of the ruble is completely determined by the state.”
She, of course, adamantly denies this – why admit her responsibility when she can deny it by pointing to the supposed invisible hand of the market?
In addition: by fully controlling the process of determining the exchange rate, the authorities are undermining the exchange rate of the ruble this very year. Not last time, when its low level posed a threat to the budget and undermined the remaining non-carbon exports – namely, when it was at an acceptable and comfortable level for the economy.
The only hypothesis, based on the assumption of the reasonable management of the socio-economic sphere of Russia by the liberals, focuses on the activation of Russian industry, including civilian.
This created for the liberals a threat of the emergence of significant investment prospects and, accordingly, the hijacking of financial resources from the speculative sector, where they generate profits for financial speculators.
According to the economist Andrej Bunich, the presented forecasts do not have any fundamental significance.
There is no assessment of what really lies ahead, but a retelling of meaningless talk. Everything described is just a reaction to some events, some pathological perception of reality.
It is as if Russia itself, as a subject of world politics and economics, does not exist at all. It is not clear whether Russia is pursuing any goals regardless of what will happen? We need to have some sort of development agenda on which to make decisions.
«SP»: But what happens in the world matters to us…
“Of course there is.” But we must be an entity that must also influence these external conditions, influence the world economy in the right direction, cause political and financial events.
Russia’s capabilities are greater than many people realize. The Western financial world is very fragile and empty, like a bubble that is not that difficult to pop if there is political will.
According to the head of the Center for Political Economic Research of the Institute for a New Society, Vasily Koltashov, the announced scenarios showed ambiguity in the actions of the country’s financial leaders.
— The fact is that against the background of these scenarios, or something similar to scenarios, a rather well-written article was published by the adviser to the President of Russia Maxim Oreshkin, dedicated to the economic situation in the country and the situation of the ruble. He laid out several positions not in the modern script version, but in a monolithic one.
He pointed out that the Russian economy grew in the second quarter of the current year by 4.5% of GDP, exports grew, world prices of goods increased.
And overall, the second quarter managed to correct the issues that seemed problematic in the first three months of 2023.
Based on this, we can expect the adoption of measures to stabilize the exchange rate of the Russian currency – the ruble has fallen too much and it will be returned to its previous level.
I suggest that presenting these scenarios and publishing Oreshkin’s well-written article are links in the same chain.
The Dean of the Faculty of International Economic Relations at the Financial University, which is under the jurisdiction of the Government of Russia, Pavel Seleznev, commented on the fact that at an extraordinary meeting the Central Bank of Russia raised the key interest rate to 12% per annum, the highest level since May 2022
He notes that by raising the key rate, the Central Bank makes loans more expensive, but at the same time increases deposit income for the entire banking system:
— If money becomes more expensive for the banks, they raise the interest rates on loans to end users and at the same time raise the interest rates on the population’s deposits, because they themselves can invest this money at a higher interest rate in the Central Bank.
So the increase of the key interest rate to 12% will lead to an increase in the cost of loans and an increase in income from deposits in the market.
This means that people will borrow less and make fewer purchases, and the free money, instead of spending it, will be invested in profitable deposits with financial institutions.
This will lead to a reduction in inflation. However, on the other hand, due to a lack of demand, the Russian economy will develop more slowly than planned.
At the same time, the expert explained that if we talk about the exchange rate that would be beneficial for the development of the native economy, it would be within 75-85 rubles per dollar.
“The devaluation of the ruble would make sense if we had industrial production to replace imports. However, import substitution in our country is only beginning to develop.
Therefore, the devaluation of the ruble, instead of protecting domestic production, will only lead to an increase in the price of imports for the population and goods for investments, necessary for the development of the economy,” emphasizes Pavel Seleznev.
Translation: SM
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