To survive will become even harder

The economic development Ministry has adjusted the forecasts for next year to the downside compared to the April version.

According to the Ministry of economic development, the real incomes of Russians instead of 1% will increase only by 0.1%. With projected inflation of 4% and reducing the growth of consumer lending, which in recent years provided the consumer demand, new figures say about the deteriorating situation in the country.

Amid official forecasts of the experts ‘ assessment of the Ranepa and the Gaidar Institute are even more pessimistic. “Rosbalt” acquainted with they have prepared new monitoring of the economic situation in Russia. According to the authors of the document, the balance between stability and growth of the Russian economy will continue to be biased towards stability. In our case this means that we remain roughly in the same place where was.

The main factor in reducing many of the predicted performance of the experts is not so much risk is external as the internal. In recent years, the demand for goods and services were supported only by consumer lending, which only last year was up 24%. The nominal income of Russians grew much more modest 4-5% per year, not to mention real. As a result, the share of household expenditures on servicing Bank loans increased significantly, raising the risk of bad debts.

Next year potrebkreditovaniya will begin to curl. According to forecasts of Ministry of economic development, the growth rate in this segment will be reduced from 24 to 4%. In the long term this may alleviate the problem of defaults on loans, but will strongly affect the demand. According to the Department, this year the contribution of consumer credit in growth of final demand will amount to 1.7 trillion rubles. But the following year it reduced to 0.4 trillion rubles.

Investment growth will also be lower than expected officials in April. Even 5-6% is extremely ambitious plans that will come true only if drastic mitigation of fiscal and monetary policy, which is not in the plans, experts say.

In this situation, against the background of falling oil prices and slowing global economy even reduced the Ministry’s forecast for GDP growth (1.7% instead of 2%) next year raises doubts of the analysts.

In the first quarter of 2019, the Federal budget revenue grew mainly due to the increase in the VAT rate. Together with cost reductions this year, the Federal budget could close with a surplus of 3.3%. But too early to rejoice. As noted by senior research fellow, center for budgetary policy studies, Ranepa IPEA, head of laboratory of budget policy Gaidar Institute Sergey Belev, oil prices may decline, the potential for excise taxes as a source of replenishment of the budget is almost exhausted, and the increase in the VAT rate indirectly had a negative impact on domestic consumption and imports. In addition, in the second half of the budget expenses will grow significantly as cash execution in a number of national projects in the first half was very late. On a number of projects, such as “road Safety”, “Digital public administration”, “the Success of every child,” money is almost never spent. This means that by the end of year budget surplus may be significantly reduced.

Growth of incomes of consolidated budgets of regions also has slowed: in the first four months of this year, revenues increased by 22.6%, in may—July to just 1.4%. According to the author of the monitoring until the end of the year will probably remain at a low level. The third year in a row continues to widen income differentials between rich and poor regions, said a senior researcher of the center for budgetary policy studies, Ranepa IPEA, researcher of the laboratory of budget policy Gaidar Institute Alexander Deryugin.

Against this background, the country had two opposite trends that are growing stronger every year: reduced fertility of the first and second children, and in parallel increases the birth rate for third and subsequent. A high level large families characteristic especially for regions with low socio-economic indicators, experts say. Such a pattern can be traced to the last decade. “This means that many children is most prevalent in regions where, given the economic situation of the population, state support of large families is particularly crucial”, — said senior researcher of the scientific direction “Political economy and regional development” of the Gaidar Institute, Director of the Center for regional studies and urban studies IPEA Ranhigs Konstantin Kazenin.

© 2019, paradox. All rights reserved.