Time to adapt: ​​Kudrin predicted a decline in Russia's GDP by more than 10% in 2022

At the end of 2022, Russia's GDP may decline by more than 10%.

This was announced on Tuesday, April 12, by the head of the Accounts Chamber Alexei Kudrin, TASS reports.

“Now the Ministry of Finance and the Ministry of Economic Development are assessing the decline in GDP this year.

Of course, there will be a decrease, ”Kudrin emphasized at a meeting of the Federation Council Committee on the Budget and Financial Markets.

At the moment, experts still differ in their assessments regarding the dynamics of the decline in the Russian economy.

So, according to the calculations of the World Bank, in 2022 the country's GDP will immediately decrease by 11.2%.

At the same time, according to the results of the survey of the Bank of Russia, the reduction will be only 8%.

According to experts' forecasts, the rate of economic recession may become a record one since 1994.

Then Russia's GDP fell by 12.7%, according to the data of the International Monetary Fund.

The sanctions imposed by the West have practically cut off Russia's financial institutions from their usual markets and restricted trade in certain categories of goods.

In addition, restrictions impede international settlements and foreign economic activity, according to the annual report of the Central Bank.

According to the Central Bank, an extraordinary shock situation will lead to large-scale changes.

Nevertheless, over time, the country's economy will still be able to adapt and recover from losses, Elvira Nabiullina, chairman of the Bank of Russia, is sure.

“The complex process of adjusting to new conditions will inevitably cause a decline in GDP, but the Russian economy will be able to return to a growth trajectory, develop production, create new jobs, and increase domestic investment.

Financial stability and predictable declining inflation are the key conditions for this,” Nabiullina believes.

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Recall that since the end of February 2022, the United States, the European Union and a number of other states continue to impose ever new economic sanctions against Russia.

This is how the West reacts to Moscow's special operation to protect the Donbass republics from aggression from Ukraine.

In total, more than 8.5 thousand restrictions have already been introduced against Russia - more than against any other country.

This is evidenced by the materials of the global sanctions tracking database Castellum.AI.

Restrictions, in particular, affected the banking industry, the energy sector, aviation and trade.

Along with this, almost half of the country's gold and foreign exchange reserves (worth $300 billion) were frozen, and many international companies announced their withdrawal from the Russian Federation.

According to Russian Prime Minister Mikhail Mishustin, the current situation has become the most difficult in 30 years of the country's history.

As the head of the Cabinet noted earlier, the restrictions are of an unprecedented scale and were carefully planned.

The authors of the sanctions expected to isolate and destroy the Russian economy, but this scenario did not come true.

“Such sanctions were not applied even in the darkest years of the Cold War.

Their goal is to set us back years or even decades.

Cut off from the world.

Force Russia to abandon promising economic and social projects.

To strike at the standard of living of our people... Those who struck believed that we would be broken.

But the economy survived.

We survived,” Mishustin said.

A complex approach

Initially, Western sanctions provoked an emotional reaction from the Russian financial market and ordinary consumers.

Thus, the announced restrictions led to a sharp reduction in the price of company securities and the weakening of the national currency: in early March, the dollar and euro rates for the first time rose above 121 and 132 rubles, respectively.

The Russians, in turn, began to massively buy food and goods, which led to an exorbitant rise in prices.

According to Rosstat, in March annual inflation reached a seven-year high and reached 16.7%.

To stabilize the situation, the Central Bank and the government have taken a whole range of measures.

Thus, the authorities obliged exporters to sell 80% of their foreign exchange earnings and canceled VAT for citizens when buying gold.

Along with this, the Central Bank temporarily raised the key rate to 20% per annum, limited the withdrawal of capital abroad, closed access for foreigners to exchange trading, and introduced a temporary procedure for handling cash in the country.

As a result of the authorities' initiatives, the dollar and euro exchange rates today returned to the levels of 79 and 86 rubles, and the pace of consumer price growth began to gradually slow down.

According to the Central Bank, the risks for the financial system still remain, but have already ceased to grow.

Against this background, the regulator began to gradually reduce the key rate and ease foreign exchange restrictions.

“Our financial system, which is the lifeblood of the entire economy, has survived.

In constant contact with the president, the Bank of Russia and the government, through joint efforts, were able to prevent its collapse and maintain the confidence of citizens in it.

Payments within the country go without interruption.

The stock market and the ruble exchange rate are stabilizing.

It is unlikely that any other state could cope with this, ”said Mikhail Mishustin.

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To support the Russians in the face of sanctions, the country's leadership launched a program of monthly benefits for needy families with children from eight to 16 years old inclusive.

In addition, the authorities are going to further index pensions, social benefits, the minimum wage and the cost of living.

As part of anti-crisis measures, the government also approved credit holidays for small businesses, expanded soft loan programs for companies, and introduced a moratorium on business inspections.

In addition, the authorities agreed on a number of tax breaks and incentives for the hotel sector and the IT industry.

To curb consumer prices, the Cabinet decided to ban the export of certain types of food, as well as provide subsidies to Russian farmers.

Along with this, Mikhail Mishustin signed a decree on the legalization of the so-called parallel imports - we are talking about the importation of foreign products into the country without the consent of the copyright holders.

Also, the authorities are now discussing the possibility of introducing external management for foreign companies leaving Russia.

As expected, the appointment of a temporary administration at foreign enterprises will minimize damage to local producers and save jobs.

“Russia is still open for a constructive dialogue (with foreign business. -

).

We respect your work, the efforts that you have invested in your projects in our country.

We appreciate our cooperation.

But if you are still forced to leave, the enterprise must continue to work, because it provides jobs.

Our citizens work there, and protecting their interests is our priority,” Mishustin said.

In new conditions

In many ways, the depth of the economic downturn in Russia will depend on the final volume of trade in 2022.

Artyom Deev, head of the analytical department at AMarkets, shared this opinion in an interview with RT.

According to the expert, in order to minimize losses, the country today urgently needs to rebuild trade flows.

“So that the decline in the Russian economy does not turn out to be so strong, the government and business are already working on reorienting export deliveries to other countries.

In addition, the development of the domestic market and consumption will be an important factor,” the analyst noted.

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In general, the country will need about six months to adapt to the new economic conditions, Mikhail Mishustin believes.

In his opinion, in the current circumstances, it is necessary to put aside all political differences and unite around the interests of the people and the achievement of goals.

“The situation is difficult, but working.

A space of possibilities, unique on a historical scale, has emerged, if you will.

And we are obliged to take advantage of this,” Mishustin stressed.

In the current environment, Russia should place even greater emphasis on import substitution and focus on its own production of a number of goods.

This was told to RT by Georgy Ostapkovich, Director of the Center for Market Research at the Institute for Statistical Research and the Economics of Knowledge at the Higher School of Economics.

At the same time, the authorities can use the experience of the pandemic to support businesses and Russians, the expert believes.

“The government will make efforts to mitigate the economic downturn, as it did in 2020.

We are talking about direct assistance to the least protected categories of citizens - Russians with low incomes and families with children.

Plus, the authorities have already announced support for businesses so that enterprises do not massively shut down production and try to keep their staff as much as possible,” Ostapkovich explained.

At the same time, the country today has enough money to fulfill all its obligations, the specialist added.

According to him, taking into account unblocked reserves and income from the sale of raw materials, the state should have enough funds to support the population and businesses for several years to come.

“However, it is important to spend these funds correctly and in a timely manner.

It is necessary to choose the most affected sectors of the economy, as well as provide full assistance to citizens and maintain employment as much as possible, ”concluded the specialist.