The Crisis Has Not Passed

Vladimir Milov on the current economic situation:

The basic problem remains the same: the fall of consumer purchasing power at the level of 5-6% year on year. Retail trade turnover dropped 5.9% in June, the real disposable income of the population by 4.8%. Rosstat is not publishing monthly investment data this year – only quarterly, but Economic Development Ministry officials predict a significant drop in the results of this year. Slightly better are the dynamics of real wages – up 1.4% in June, but overall the picture isn’t changing. There are nominal figures of small growth in industry, but actually the experts suggest that in fact behind them lies stagnation, and that growth in the extractive industries fell from 4-5% in February-March to 1.5% in May-June.

Further, he says:

The IMF reports that in the Russian banking system are hidden much more substantial bad debts than the banks show on their balance sheets, and in 2017-2018 a significant liquidity shortfall may take place in the banks.

Milov continues by noting that there is only $110 billion total left in the Reserve Fund and the National Welfare Fund (just 9% of GDP, where it was 11.2% at the beginning of the year – a loss of 2.2% of GDP).

The trade surplus in the first half of the year decreased threefold – import virtually ceased to fall, and exports have not grown due to low prices, so that in the future we can expect a new wave of pressure on the ruble.

And finally, he writes that “the government approved a budget freeze for 2017-2019…” This shows that they are acknowledging that there will be no improvement until 2020.

The crisis has not yet passed, Milov concludes.

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