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Russia on the verge of a cure for oil dependence

Россия на грани исцеления от нефтяной зависимости

Mode born the petrodollar era, is preparing for its end. And wants to stay the same as now.

Published compiled by the Finance Ministry tables that are painted, how much income will lose the Treasury (in percent of GDP), if the price of oil will collapse to $40, to $35 and further down up to $10 per barrel and will hold on this year, three, five, seven or even ten years.

Estimated loss look respectable, but a deep sense they are not looking. It’s not a scenario that details exactly what we will happen if anything. Just the gymnastics of the mind. Nevertheless, she was doing right now. In circles close to the decision-making, thinking, what would happen if oil would cease to perform his usual job of feeding regime and part of the country.

In this case are more serious documents than minfinovskih table. Among them the most entertaining — just updated by the Central Bank a set of scenarios in 2020 and the following two years. Scenarios there are, as expected, three: good, average and bad. But it is felt that the PRB dimensions are especially interesting for the poor — the so-called risky. In which is incorporated a hypothesis that in the beginning of 2020-i.e. that way through month three, the burst world economic crisis, everything goes upside down, oil will collapse and then we have to live with it — the Central Bank is trying to describe exactly how.

It is clear that this is just a guess. An artistic image. But the global crisis in fact it is time to Stratis long something it was not. And of course, it increases the likelihood of us-Chinese, and now us-European trade wars, the chaotic perspective “of Breccia” and other shake-up. The markets are clearly anxious, and the global financial-economic public concern.

This is the setting in which the Russian Central Bank enters a “risky” scenario.

The authors put into it that in the most critical moments 2020, a barrel of Urals oil will cost $20, and the average for the forthcoming triennium (2020 — 2022) the oil price will be $30. Further, the Central Bank does not look, but assures that the people and the economy will survive, though somewhat affected, and that the decline in production and living standards will be quite short — the growth of both will resume in 2021-m.

Not a single word about the recovery of Russia from petroleum dependence in the PRB document no. Let us come to this conclusion themselves.

Compare depicted by the Central Bank three-year period with those that we have experienced in the twenty-first century.

At the dawn of the petrodollar era, in 2001 — 2003, when the petroleum dependence of the disease was observed, the average price of a barrel of Urals was $24, i.e., considering the subsequent inflation of the dollar was considerably higher than the $30, which are incorporated in the risk scenario for the next three years.

The bold was 2011 — 2013 ($109).

And in this century the skinny — 2015 — 2017 ($49). For double reduction in price of oil paid then unprivileged people’s majority: the real income of the tax-paying classes dropped on government account for one-tenth, and nakatannomu, but more likely — by one-fifth. Bar well endowed with privileges, from the riot policeman and later, was not injured. And sovereign barons in the critical months of the end of 2014 — beginning of 2015 knocked himself $70 billion of foreign exchange reserves to payoff foreign debts and other urgent need.

Then there was no less instructive things. In 2018, a barrel of Urals has risen to $70, and in 2019, according to estimates, will decrease slightly — somewhere up to $63. However, the common people nothing perepalo: incomes are stagnating and even slightly declining. All the extra profit without a hitch absorbed the system, and even bestowed upon the subjects of pension reform — in a sign of the intention to save on them in the future.

Now, keeping in mind these details, which the Central Bank remind us, of course, will not, rate it risk scenario.

So, following the above that there is oil in 2020 is worth less than today, at least twice. That is its real price is lower than ever in the twenty-first century. Inflation increased to 8%. The current system of maintaining exchange rate, calibrated on an oil price of $40 and above, stops working and there is a devaluation. Estimates about how great it will be, the Central Bank is not divided, so as not to embarrass the immature minds.

According to the scenario, the import of goods in 2020 is reduced compared to 2019 nearly one — third expected in the current year $249 billion to $177 billion, adjusted for inflation, a return to 14 years ago — to the level of 2006, when imports in the prevailing price was $138 billion.

The international reserves were reduced in 2020 by only $35 billion (7%). That is, the Central Bank expects to lose twice cheaper than in the previous crisis. Not very believable, however.

Quite reasonable seems to the authors of the script and the recession — somewhere a couple of percent in 2020. And in 2021-m is already targeted for growth, albeit modest.

Not so much (the scenario) will suffer, and citizens — real household expenditures on final consumption will move down by 2%. Here, however, masked a little trick. In difficult times, the consumption goes down more slowly than real incomes as people go pending money owed, etc. Say in 2018, growth in disposable income was not, but household spending on final consumption increased according to the official account of 2.3%. With this amendment, the real disposable income of the population in 2020 should fall not less than 4%. But this recession looks incredibly modest in the midst of the promised surge in inflation, the devaluation of the ruble and scripted a sharp reduction of imports.

The picture of the crisis is definitely embellished. But let’s not blame the Central Bank. He’s also the boss is. On the contrary, thank you for the most likely overall conclusion. A few years ago, oil fell by half — and the country broke down, and the system has not crumbled. When and if fuel prices drop even more, it can be expected that the regime will again be able to pass on to citizens the costs and will continue to lead the country, recovered from petroleum dependence.

This healing will not be returning in the first years of the century, with their hopes for rapid development, and eventually to freedom. A few of the trillions of petrodollars, acquired over nearly two decades of boom, the system is half invested in himself, and half to the improvement of the living standards of the people. This second part of the old spending mode now for the parts seeds. And at first he the most radical image of self was strengthened. And aims to ultimately hinder any movement forward.

Maybe not now, but soon enough the Russian neftezavodskoy if not does take place, it will dramatically weaken. But with the perversions that she will leave a legacy, the country has to understand and understand.

© 2019, paradox. All rights reserved.

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