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Mid-term prospects of the Russian economy under the sanctions

Priority areas of development: economics
2015
The project has been carried out as part of the HSE Program of Fundamental Studies.

The goal of the research is the analysis and estimation of economic development prospects under conditions of foreign-policy confrontation and effects of sanctions and counter-sanctions. 

Following tasks to accomplish are implied by the goal:

  • regular monitoring and analysis of macroeconomic processes in USA and Eurozone, global financial markets conditions, studying current macroeconomic processes in Russian economy and key economic sectors (real sector, bank sector, financial and budget sector, household sector), external trade, financial and capital cross-border flows; 
  • regular monitoring monetary and fiscal policy and other directions of economic policy conducted by the Government, including policy oriented on changes of the economic structure; 
  • estimation macroeconomic consequences of the reached decisions; 
  • studying global processes concerned with applying and cancellation of economic sanctions and counter-sanctions, estimation of sanctions effects on the current dynamics and prospects of Russian economic development; 
  • estimation of short-term prospects of Russian economy based on regular survey of macroeconomic forecasting specialists opinions and application of the cyclical indicators; development of scenarios of global and Russian economies for short-term and mid-term period based on macroeconomic modelling; 
  • preparation of expert conclusions on official Forecasts of social and economic development of Russia, Federal budget law projects, projects of Guidelines for the Monetary Policy of the Bank of Russia;
  • improvement of model and econometric set of instruments used for accomplishment of the tasks above-listed. 

Methodology: statistic and econometric instruments of data analysis; surveys of macroeconomic forecasting specialists opinions; analysis based on the composite indices system outstripping the general economic dynamics by 1-2 quarters. For mid-term and long-term forecasting the multidimensional macroeconomic model was implemented, which allows to run imitation modelling of various scenarios of Russian economy development, to reveal bottlenecks and to estimate potential effectiveness of measures of government regulation.

Empirical base of research: open data sources provided by Federal State Statistics Service of Russia, Bank of Russia, Ministry of Finance of Russian Federation, Russian Federal Treasury, Federal Tax Service of Russia, Federal Customs Service. For the purposes of the research also were used official Forecasts of social and economic development of Russia, Federal budget law project, projects of Guidelines for the Monetary Policy of the Bank of Russia, strategic planning system documents.

Results of research: Main tendencies of the global economic development and global oil market were revealed. Low oil prices in the mid-term period are the most probable scenario. Key factors of the Russian economic crisis are: structural disproportions in the economy, the budget system adapted to the high oil prices, the credibility gap which causes lowering in investment activity in the private sector and capital outflow. Effects of low oil prices and foreign-policy confrontation intensified negative trends and led to negative economic growth rates. In spite of advantages from devaluation Russian economy remains oil-and-gas-dependent. Oil-and-gas sector showed better dynamics of surplus, wages and investments, in comparison to other sectors. Household sector suffered in 2015 more than any other sector. It concerned with private sector wages slowing down, as well as limitations of indexation of budget transfers under the inflation exceeding 15% year-over-year. Restrained budget and monetary policy oriented to macroeconomic stabilization, is combined with nonmarket adaptation, including outward barriers, coercive influence on business. Regular surveys of macroeconomic forecasting specialists’ opinions, dynamics of cyclical indicators developed for Russian economy, find out high probability of continuing recession in 2016. The analysis of federal budget parameters shows that in conditions of moderate growth of nominal expenditures the expenditure structure deteriorated because of the growth of military and defence spending share, and non-transparent expenses. Mid-term forecast parameters estimated for Russian economy under conditions of low oil prices and sanctions show that the recession in Russian economy can continue no less than two years.

Level of implementation,  recommendations on implementation or outcomes of the implementation of the results: practical importance of the research includes the possibility to use the research findings in preparing regular informational and analytical reports, addressed to interested organizations Commentaries on forecasting social and economic development of Russia, Federal budget Law project, projects of Guidelines for the Monetary Policy of the Bank of Russia, and recommendations addressed to President, the Government and the Bank of Russia. The results can be implemented for informational, expert and analytical support of Government and Bank of Russia on economics and economic policy questions.

Publications:


Mironov V., Petronevich A. Discovering the signs of Dutch disease in Russia // Resources Policy. 2015. Vol. 46, Part 2. P. 113-126. doi
Mironov V. Russian devaluation in 2014–2015: Falling into the abyss or a window of opportunity? // Russian Journal of Economics. 2015. Vol. 1. No. 3. P. 217-239. doi
Alexeev M., Chernyavskiy Andrey. Taxation of natural resources and economic growth in Russia's regions // Economic Systems. 2015. Vol. 39. No. 2. P. 317-338. doi