The first half of 2020 was a very difficult period for Russia in social and economic terms. There are several reasons for this, and it will take a long time to recover the economy on a previous scale.
Drop in oil prices and coronavirus
At the very beginning of 2020, the main event for the Russian economy was the fall in oil prices, which was the result of a sharp decline in demand for "black gold" from such key players in the world market as China, the United States and European Union countries.
In the first months of 2020, China struggled with the spread of coronavirus, and therefore reduced the volume of transportation and production. Then came the turn of Europe and the United States. The failure of the agreement with the Saudis led to a further collapse in oil prices and to a fall in the Russian currency: the price of the euro and the dollar in a certain period soared by 15-20 rubles.
The next sad event for the country's economy was the introduction of a day off in April 2020, which was associated with the need to counteract the spread of coronavirus. For the first time in the latest stories the pandemic led to the deliberate (by decision of almost all governments) suspension of most sectors of the economy.
In fact, during the peak of quarantine measures, only strategically important (fuel and energy, defense, communications, etc.) and vital (agro-industrial complex, food and drug trade) industries worked. The remaining segments of the economy were in a deplorable position.
Tourism, hotel business and public catering, the beauty industry, and transport suffered severe losses, many enterprises in these industries have not yet recovered. Naturally, the current situation affected the employment of the population and its income: unemployment increased, many citizens employed in the most affected sectors lost income. This, in turn, was reflected in consumer demand: for the most part, people buy the most necessary and less expensive. The segment of shadow services has also grown.
Bank lowers key rate
At the same time, if we talk about indicators of economic growth, of the major global economies, only the American and Russian in the first quarter of 2020 still showed even minimal, but still growth. The American economy grew by 0,3%, the Russian - by 1,6%. You can compare with the Chinese economy, which declined over these months (-6,8%), and this is the first time in three decades. The International Monetary Fund (IMF) predicts a general decline in world GDP by 3%, and Russia's GDP by 5,5%.
On June 19, the Bank of Russia nevertheless went to reduce the key rate to 4,5%. The main reason for reducing the key rate is the desire to keep inflation at around 4% in 2020. Such measures have been taken due to the fact that in the second quarter of 2020, GDP is expected to fall by 8%. The head of the Bank of Russia Elvira Nabiullina believes that Russia's GDP will only be able to return to the level of the end of 2022 only by the first half of 2019, the consequences of the pandemic turned out to be so widespread for the economy.
The general forecast of the Bank of Russia is disappointing: in 2020, the economy may contract by 4-6%. The reduction in the key rate will inevitably lead to changes in the credit policy of banks. Already, banks have begun to take a closer look at the analysis of the situation of borrowers, setting more stringent requirements.
The situation in the Russian economy for Military Review was commented by Ekaterina Dontsova, Operations Director of Backit cashback service and ePN Affiliate affiliate network:
A “hard landing” was predicted to the Russian economy last year, when GDP growth for the year froze at around 1.6%, the rate of retail lending slowed, sales of commercial and personal cars slowed down. At the beginning of 2020, experts saw the growth potential in the implementation of national projects, but at the beginning of the year their indicators froze. But it is not all that bad. So, our e-commerce segment will continue to grow steadily. The speed taken this year is already called cruising. Projected growth is from $ 400 million to $ 3,1 billion in 2021.
It is difficult to disagree with the expert that the current situation has rather productively affected the ongoing digitalization of the business, the transition to telecommuting and electronic document management. But many areas of the economy cannot be fully digitalized, factory workers cannot be transferred to a remote site. Therefore, at least some business segments will increase incomes, they will inevitably ask others, which has already affected the situation of citizens and will subsequently affect even more.
Of course, the government, on behalf of Vladimir Putin, tried to prevent social collapse, including through urgent measures to financially support families with children, the unemployed, and the poor, but many experts note the impossibility of covering those losses that millions of Russians suffered in these allowances and additional payments. self-isolation time.