Officials from Russian Prime Minister Mikhail Mistin worked for months in a basement operating room on the opposite bank of the Moskva River from the White House, which houses the Russian government’s headquarters, which locals have jokingly called the “bunker.” Objective: To precede Vladimir Putin’s annual speech on the nation when the Russian president announced the details of the recovery plan on April 21, and to find money to finance Russia’s economic development after the epidemic. But, in equilibrium, the announced measures are so moderate that they can be masked with the funds already available. According to analysts, it is a missed opportunity to revive the economy.
For much of his speech to the Chambers, which convened last April, the Kremlin leader was simply encouraging the growth of infrastructure, helping the debt-ridden regions that make up the Russian Federation, and, above all, facing the downturn. population . “The main objective is to ensure the growth of the income of real citizens,” said the Kremlin leader, moving away from the continuing social benefits aimed at supporting families: monthly subsidies for expectant mothers, free meals for future mothers in need, paid holidays for parents caring for sick children and school A contribution to families with adult children. However, the promises were so mediocre that they were covered up with funds already available. After all, already the previous year, with a full epidemic, a package of just ில்லியன் 44 billion was approved for a country of 144 million people: about 3 percent of GDP and less than a tenth. Presented by Italy.
However, the Russian economy faced the first year of the corona virus crisis better than all other major world economies, and thanks to the desire not to impose a second lock on the fall of the Kremlin, despite an increase in infections, hospitalizations and deaths. According to Rosstad, the national economics agency, GDP fell by 3.8 per cent last year, down from 3.8 per cent forecast by the same Ministry of Economy and 4/5 per cent by the central bank in the spring. When oil lost 70 percent of its value, prices fell to as little as $ 20 a barrel. This is a much lower decline than the world average. Half of the expected 7.7 per cent in the eurozone is -11 per cent in Spain and -8.3 per cent in France. But it was the largest contraction of the Russian economy since the Great Recession of 2009. Per capita GDP is now 30 percent lower than in 2013.
Russia endured the shock of the epidemic because, unlike other economies, it has a long record of isolation. Since Russia annexed the Crimean peninsula of Ukraine in 2014, the Kremlin has built a “financial stronghold” that will not affect the country in the event of Western sanctions or fluctuations in oil prices. A fortress that resists external shocks, but also creates stagnation and dissatisfaction that provoke resistance internally. Its foundations are low credit and large reserves. The National Welfare Fund for “Rainy Days” funded the oil and gas market with higher returns than price, which was $ 183 billion at the end of 2020, the highest since 2009 and the international reserve was $ 596 billion. Annual imports accounted for 7 per cent stake in US banks, compared to 30 per cent in US dollars in 2013 alone.
Inflation and real income
However, the desire for stability for economic recovery came at a high cost to the well-being of the people. Rising inflation, driven by global food prices and the weakness of the ruble are putting further pressure on the poor living standards of Russians. Last year, according to the business newspaper “Rbk”, another 400,000 households fell below the poverty line set in Russia for 190 euros a month, adding 19.6 million Russians and real spending income fell 3.5 percent for the fifth time in seven years. Today, the average Russian spends 10 percent less than it did in 2013, the last year of growth. To try to control inflation, which rose the fastest since February 2016, and the consumer price hike, which reached 5.8 percent on March 15, forced the government to set prices for certain food items, while the central bank raised interest rates for the first time since 2018.
Stick without carrots
Clara Ferreira Marx, a Bloomberg researcher, is another missed opportunity to cultivate a global economic outlook. “It simply came to our notice then. The proposed tax changes, for example, will not solve the problems that prevent companies from investing heavily. ” Vladimir Kelman, a professor at the European University of St. Petersburg, warned of the danger of falling into what he calls the “trap of oppression.” Suppressing protests without fulfilling the demands of the protesters becomes a vicious circle that requires more and more repression. A stick strategy without carrots.