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- Difficulties of transition: the Ministry of Economic Development named the main economic challenge of the next year
Difficulties of transition: the Ministry of Economic Development named the main economic challenge of the next year
The main challenge for the country's economy in 2025 is its cooling policy, said Maxim Reshetnikov, Minister of Economic Development of the Russian Federation. According to him, the negative effects of this process are not so noticeable yet: they are smoothed out by traditionally high pre-holiday sales, which support GDP growth. How realistic it is to avoid difficult consequences and what can be done for this - in the material of "Izvestia".
No surprises
The cooling of the economy is not something catastrophic, says Vladimir Yeremkin, an expert of the Structural Research Laboratory of the IPEI RANEPA RANEPA RASKhIGS.
- First, although a slowdown is expected, the economy will continue to grow, but at a noticeably slower pace. Secondly, for such a large economy as Russia's, growth of even 1.5-2% per year is a very significant result," the expert said in a conversation with Izvestia.
From the point of view of public policy, when there is an understanding that one phase of the economic cycle is replaced by another, it is important to competently manage the emerging imbalances. Therefore, economic policy should be focused on pressing problems related to high inflation, support for the poorly protected segments of the population, and preservation of key companies in the industries most exposed to negative phenomena in the downward cycle.
- It is also important to consolidate resources on growth drivers in order to find new points of support for the future development of the economy, Vladimir Yeremkin added.
It is possible to mitigate its consequences for specific industries or social groups - usually through budgetary measures, Anton Tabakh, chief economist of the Expert RA rating agency, confirmed to Izvestia.
- "Soft landing" of the economy is the price to pay for macroeconomic stability. The question is exactly the price and speed of cooling, which is necessary to reduce inflation, but will allow us to do without too negative consequences for the economy and growth," he emphasized.
Domestic resources
The Ministry of Economic Development has made an optimistic forecast for economic growth next year, according to Ilya Fedorov, chief economist at BKS Investment World.
- To be fair, the Ministry of Economic Development's optimistic forecast for 2022 and 2023 came true and exceeded all expectations. Then experts underestimated the impact of import substitution and wage growth. Next year, these factors will have already exhausted their effect. There are not many internal resources for growth," Ilya Fedorov told Izvestia. - The effect of import substitution has been largely exhausted. Export potential is limited. The increase in labor efficiency after two years of extensive growth is also limited.
Next year's budget is inflation-neutral, and lending is slowing sharply, the expert said. Real interest rates are above 10% and debt servicing costs will continue to rise. Expectations of rising defaults in the economy after the Bank of Russia's decision to maintain the rate have slightly decreased, but have not disappeared.
- The Bank of Russia fears an unmanageable slowdown of the economy, in which case the achievement of the inflation target will be postponed indefinitely, and this is unacceptable in the context of several years of high inflation. Be that as it may, the GDP growth rate next year will be far below the 2.5% target set by the Ministry of Economic Development. What figure we will see at the end of the year will largely depend on the results of the first half of the year, the well-being of the corporate sector and the realization of credit risk, - added the expert.
The process started
The cooling of the Russian economy began at the end of 2023, when a significant increase in the key rate by the Bank of Russia (last August by 300 bp, up to 15%) began to have an impact, said Konstantin Andrianov, Associate Professor at the Institute of Economics and Finance of GUU, Academician of the Russian Academy of Sciences. The current level of the key rate is 1.5 times higher than the level of return on sales in the economy as a whole (13.5% by the end of 2023) and almost three times higher than the return on assets (7.5%).
- For the majority of private companies in many sectors of the Russian manufacturing industry (where profitability remains markedly below the average level in the economy), raising loans is unaffordable. The majority of Russian industrial entities cannot afford to attract credit resources even to replenish working capital (which is necessary to continue normal operations and maintain production volume and development rates). We cannot even talk about investing in the expansion of production infrastructure at such credit rates," the expert noted in his conversation with Izvestia.
At the same time, the share of investment loans in the structure of the banks' portfolio continues to shrink.
- In the current situation it is necessary to urgently and fundamentally revise the approaches to the monetary policy, assuming the achievement of price stability and consumer inflation targets not in the next one or two years, but on the horizon of six to seven years, but on a more solid basis - expanded commodity supply," the expert believes.
In addition, in the fight against the cooling of the Russian economy could help reformatting and implementation of a stimulating tax policy aimed at the development of the Russian production sector (primarily manufacturing and agriculture), namely, the introduction of profit and property tax vacations for new industrial and agricultural enterprises.
- It would also help to establish for Russian industrial and agricultural companies for an indefinite period of time a zero VAT rate and a zero customs duty rate on imports of new industrial equipment (if it is either not produced in Russia at all, or it is produced in insufficient volume), - said the expert. - At the same time it is necessary to establish for Russian industrial and agrarian companies everywhere preferential rates of property tax for the launch of new industrial equipment (for a period of up to three years from the date of launch, if the equipment was purchased by enterprises on credit - then the provision of this benefit for the entire term of the loan agreement).
It is first necessary to identify the most critical industries and form targeted support measures, said Sergei Khudyakov, co-owner of the insurance broker Mainsgroup, in a conversation with Izvestia.
- After fighting inflation, the economy will adapt itself by returning to investments in various sectors. Import substitution is still a hot topic, and we need a clear protectionist policy aimed at critical industries. There are also more specific things that need government involvement," he believes. - Russian companies are experiencing difficulties with personnel, including due to the outflow of migrant workers, logistics, and huge problems in the area of financial interaction with counterparties from friendly countries. Making a payment for a product and then delivering it to Russia is not an easy task.
"Izvestia sent an inquiry to the Ministry of Energy, but at the time of publication no response had been received.
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