Real business is confident that the Russian economy is in crisis, and warns that economic growth will not take very long. However, the government is satisfied with its actions and is confident that the situation is manageable and stable.
The VTB Capital Forum Russia Calling! Clearly showed the gap between the Russian government and business. Representatives of the business, warning about the danger of the devaluation scenario, the severity of high rates and the absence of economic growth, spoke into the void. The Ministry of Finance and the Central Bank did not enter into the discussion, limiting themselves to the usual mantra: “Do you really want us to fill everything with cheap money? We all know what this leads to ”- as if there were no intermediate options at all between the 15% and 1% rates, the emission of trillions of rubles and the contraction of the money supply. Ensuring economic growth and investment were mentioned, but these topics were left out of the debate.
The curve can not be made straight
Commenting on the 2016 budget for the year, the head of Rosneft, Igor Sechin, turned to the Bible, or rather, to Ecclesiastes. "The crooked cannot be made direct, and what is not there cannot be counted," Sechin quoted, referring to the government’s decision to abolish the reduction of export duty for oil companies, which, according to the Ministry of Finance, had a "devaluation income" due to sharp fall of the ruble.
Despite the decline in the summer months, lending rates for end borrowers are significantly higher than pre-crisis
Recall that in October, Finance Minister Anton Siluanov published an article in the Vedomosti newspaper, explaining the position of his ministry. The Ministry of Finance decided that “the profit of oil companies from changing the amount of deduction in rubles only on MET for oil will be about 500 billion rubles”. However, the so-called devaluation income of oil companies, which the Ministry of Finance sees, is actually virtual, the head of Rosneft explained. The desire of the government to redistribute this income leads to the withdrawal of investment resources from the backbone sectors of the economy. The current stability of oil production was the result of investments from previous years, but current investments are questionable - in the first quarter of 2015, the Russian oil industry received negative cash flow, and the situation with investment programs in the industry deteriorated. According to Igor Sechin, budget decisions carry the risk of lowering annual oil production at 25 – 30 million tons (about 530 million tons is mined in Russia annually). However, Anton Siluanov dismissed these arguments. “Our task is to leave more funds to companies, including Rosneft, and withdraw less,” the finance minister said, adding that under current conditions, most of the profits of oil industry workers who could think about efficiency have to be centralized. “The volume of production is not important, it is important how many dollars are spent per barrel,” Siluanov said. Economic Development Minister Alexei Ulyukayev stepped in for the oil industry, warning that high duties would kill fields with inaccessible oil. “In 2018, you will have a minus in tax revenues, and I’m not talking about investments, I’m talking about budget losses,” Ulyukaev warned Siluanov. However, the Ministry of Finance does not step back from the usual logic, in which there are only two options: either an increase in the budget deficit, fraught with an increase in taxes, or a withdrawal of money from all possible sources while maintaining a low budget deficit.
The peak of consumer inflation passed. At the end of the year, the price increase will be 10-12%
It is appropriate to make a small digression. The budget deficit is in fact not a goal to strive for, but rather, a certain indicator of the state of the economy. So, if now the US budget deficit is 2,8%, then in the fat 2007 year it was 1,1%, and in the crisis 2009-m it reached 9,8% GDP. On average, over the past 35 years, the US budget deficit has fluctuated around the 3,2% of GDP. The UK budget deficit is now around 5% of GDP. The reduction of this indicator does not necessarily have to occur as a result of a reduction in budget expenditures - you can go the opposite way, increasing GDP, because the development of production can really be made a goal. But today a new myth has emerged in the financial block of the government - the myth of “qualitative growth”, which supposedly opposes the “poor quality” caused by an abundance of cheap money. The question of a noticeable increase in government borrowing to cover the deficit by our Ministry of Finance is not being considered: according to the prevailing ministry’s opinion, this will divert money from the private sector. Thus, it seems that the oilmen will have to turn to the Bible more often.
The Bank of Russia does not plan in the next three years a large-scale expansion of the money supply
Siluanov and Sechin agreed only in one thing - the need to limit the tariffs of natural monopolies. The head of Rosneft complained that pipeline monopolies do not come from the cost of pumping oil, but from the market price of goods, as a result of which the oil industry workers are forced to pay in dollars in the country. “Natural monopolies have trillions of expenses, and who controls their quality?” Anton Siluanov wondered. However, further discussion of the case in limiting the tariffs of natural monopolies does not go so far.
Grow on your own
Even more dismal was the speech of the head of Rusal, Oleg Deripaska. “In terms of GDP in dollars, we are moving to the level of 1998 of the year,” warned the head of the aluminum holding. - There is a crisis. I would seriously think about what kind of economic policy we need. Domestic demand is monetary policy. At such rates, no one will occupy and create production. How to really provide resources for small and medium businesses? You need to give them available credit at five percent. As long as this rate does not exist, there will be no breakthrough. ” However, it was as if he had not been heard, only the head of VTB, Andrey Kostin, 1, said that he did not see much point in lending to small and medium-sized businesses. “If today small and medium businesses are not in demand in the country, if there is no field of activity for them, what’s the point of lending, it will only be irrecoverable debts,” the head of VTB said ingenuously. Of course, with interest rates at 20% per annum - and for small businesses now they are exactly that (see 1 chart) - loans have a great chance to become non-refundable. But surprisingly, the head of a large bank considers small and medium enterprises unclaimed - small cafes around the house, shoe repairNUMX, children's developmental centers, tire fittings - all that is part of the daily routine of millions of ordinary people unclaimed. And in principle, the head of VTB seems to perceive the development of a business with borrowed funds as a kind of whim. “Oleg Vladimirovich is my friend, but depriving him of the capital markets is a blessing, give him how much money, he will use everything,” Andrei Kostin joked. And the head of the Central Bank Elvira Nabiullina was glad that companies today are investing mainly in their own funds in development.
President Vladimir Putin expects the economy to grow on the growth path next year.
On the other hand, the Minister of Finance and the head of the Bank of Russia were very pleased with the speech of the founder of Magnit, Sergei Galitsky, who spoke out against artificially stimulating demand. “A person cannot eat two breakfasts, he does not need forty cars,” the entrepreneur developed his thought. But if there are more people in the country and they live longer, the demand will grow naturally. Therefore, according to the founder of "Magnit", you need to invest in a person 1 - namely, to increase fertility, reduce mortality, etc.
Bank of Russia head Elvira Nabiullina waits for inflation to slow down
Well, you can see what happens with investments in a person. The article “On the front and in the rear of Russian medicine” (see “Expert” No. 38) provides a graph of mortality - after a long decline, it began to grow in the 2013 year, with the beginning of an active increase in the efficiency of spending on medicine. Adjusted for inflation, the real growth in health care spending in nine years, from 2005 to 2014, was only 15%, half the real GDP growth. And since 2013, amid rising inflation, health care costs have begun to decline rapidly in real terms. In 2016, they will be 473,7 billion rubles against 531,4 billion rubles in 2015 (a reduction of more than 20% with inflation). Note that, as the retrospective shows, this reduction will inevitably lead to an increase in mortality, which cannot be closed to the eyes. Let's add here the indexation of pensions not by actual inflation, but by target inflation - by 4%, and not by 12%. Let us add the refusal of indexing pensions for working pensioners. By the way, if this refusal takes effect for several years, then in the end their pensions will be seriously reduced in real terms - and in the end the question of indexation will arise for a more serious sum. But the government prefers not to think about it today.
Finance Minister Anton Siluanov: we try to keep more money in companies
The situation in the working-age population is also not the best: according to the Ministry of Finance, the real disposable income of the population in the first quarter of 2015 decreased by 1,4%, while the real wage decreased by 8,3%. 77% of Russians, according to Levada Center, believe that there is a crisis in the country. According to VTsIOM, 62% of Russians save on food and consumer goods. FOM has similar data: 46% of Russians reduce spending on food, primarily on meat, cheese, sausage and fish. According to a Sberbank CIB survey, 36% of the population reduced all expenses altogether, fearing further deterioration of the economic situation. It seems that we are not very successful in stimulating final demand and investing in people.
What will happen to opportunities
What awaits our economy in the near future? Russian President Vladimir Putin, who spoke at the forum, was rather optimistic and said that although this year there will be a downturn in the economy, in the coming years "we will not only get out of this state of depression, but also establish a positive dynamic as a whole." The economy has adapted to the new conditions, the head of state noted, and in many industries - mechanical engineering, agriculture, processing - new opportunities are opening up.
Head of Rosneft Igor Sechin: There is no “devaluation income” of the oil industry
However, the question is how enterprises will be able to realize these opportunities. In a September article in Rossiyskaya Gazeta, Prime Minister Dmitry Medvedev made the following statement: “Today, one of the key tasks of the public administration system is to stimulate investment activity. Its decision largely depends on the willingness and ability to work to improve the business climate and to convince entrepreneurs to invest in the relevant sectors and regions. ”
But the reason for the decline in investment is unlikely to lie in certain beliefs of entrepreneurs. Just for any project you need investments - and for investments you need money. And the volume of investments will not grow as long as the amount of money in the system is seriously limited, while the Central Bank will clamp down on the money supply. Changes in the economy associated with the devaluation were not balanced at all, Oleg Deripaska explained on the forum. Nobody thinks that the processing and extractive industries should buy equipment for dollars and euros, no one thinks about the cost of currency and ruble borrowings for companies. If entrepreneurs have to wait until the Central Bank sees low inflation and lowers rates, opportunities may die without being realized.
The founder of "Magnit" Sergei Galitsky called to invest in a person
Now inflation remains very high: from 1 to 12 in October, the consumer price index rose by 0,3% (in annual terms; however, without removing seasonality, it is 16%). The existing opinion that annual inflation will reach about 12% and in the conditions of squeezed money supply, it will probably fade further (see the graphs of 2 and 3), in our opinion, is not confirmed. For all history наблюдений за российской экономикой мы видим, что заметное падение производства сопровождается ростом инфляции (производители пытаются компенсировать падение физического оборота высокой ценой, что естественно при постоянных издержках и высоких процентных ставках даже на оборотный капитал). Переломить эту тенденцию может только очень сильное денежное сжатие, которое будет стоить экономике очень дорого. На минувшей неделе агентство Standard & Poor’s понизило прогноз роста ВВП России с –2,6 до –3,6% в 2015 году и с 1,9 до 0,3% в 2016-м. «Мы ожидаем более продолжительной стагнации внутреннего спроса, обусловленной более низкими и волатильными ценами на нефть, а также более жесткой по сравнению с нашими предыдущими допущениями бюджетной и денежно-кредитной политики», — говорится в отчете агентства. И это при том, что в первой половине 2015 года потребительский спрос и так снизился на 9%, а инвестиции в основной капитал — на 8% по сравнению с тем же периодом 2014 года. А рост прибыли компаний почти на 40%1 с января по июль 2015 года по сравнению с тем же периодом прошлого года, которому так радовалась на форуме «Россия зовет!» Эльвира Набиуллина, по расчетам специалистов S&P, вызван падением курса рубля и снижением расходов на оплату труда — то есть вовсе не является показателем хорошего положения дел у бизнеса. В то же время ограничение индексации пенсий, замораживание заработной платы в бюджетном секторе и повышение налогообложения энергетического сектора могут в еще большей степени ослабить спрос в краткосрочной перспективе, хотя, добавляют аналитики агентства, действительно могут поспособствовать сдерживанию инфляции и дать Банку России возможность быстрее возобновить снижение процентных ставок. Прогноз самого ЦБ и правительства — 6,4% инфляции в 2016 году и 6% в 2017-м. Владимир Путин по этому поводу отметил, что ЦБ связывает инфляцию с объемом денежной массы, но в этом году, несмотря на то что денежная масса почти не увеличивалась, инфляция все равно оказалась высокой.
President of Rusal Oleg Deripaska: there is a crisis
The government in vain reassures itself that production has stopped falling and everything was not as scary as they had expected in the spring. In the period of the Great Depression, there were also moments of suspension of the recession, but they ended in a new fall. Depression lasted ten years. The Japanese depression has been going on for almost twenty years. Today there is not a single reason for the restoration of 1 growth in Russia: the effect of devaluation on the domestic market is eaten by a drop in real incomes of the population. Promotion of non-commodity exports on a scale sufficient to compensate for at least a fall in raw materials exports (not to mention a drop in domestic demand) is a long process that requires serious infrastructure investments from the state. At the same time, the government rejects all possible ideas of serious growth stimulation: a large-scale reform of housing and public utilities is impossible while management companies are stealing; construction of transport infrastructure is impossible, while inflation is high. The budget discussion also looks dramatic: today, the government should report to the Duma not on how it cuts down expenses, but on how it intends to expand the taxable base - where new productions will come from, that is, new taxpayers, what the government will do for that. The Central Bank should not talk about inflation and the course, but about economic growth. And not in a few years, but next year. That is literally the way to ask: what will you do to accelerate growth next year? And let them answer: we will restrain the growth of the money supply and sanitize the banks.
Today, the rollback of the Russian economy in terms of household consumption to 2004 – 2005's looks quite real. We will lose almost 10% in a year. Another 15-20% with such a policy is not a problem at all. Will we start growing after that? Not. Until the government starts large-scale investment projects through bond loans and / or resorts to a drastic reduction in current business taxation, growth will not begin.