Russian economy recovering, but outlook for sustainable growth unclear amid Covid, uncertainty - minister
MOSCOW. June 18 (Interfax) - The public health situation and a number of other uncertainties currently make it impossible to make long-term forecasts about sustainable economic growth in Russia, Economic Development Minister Maxim Reshetnikov said.
"It seems to me that at the moment it's still early to talk about the sustainability of this growth. The recovery is underway, but ultimately we would not just like recovery, we need to grow further, after all. And right now it's premature for us to make any far-reaching conclusions based on one month. We only have April in hand at the moment, May will start coming out next week," Reshetnikov said at a briefing on Thursday when asked if the worsening Covid-19 situation will affect the macroeconomic forecast for this year.
"Right now it's probably still premature to talk about this. The situation is developing, after all, and we need to see how it develops. Although, of course, it concerns us and, obviously, such a fairly aggressive normalization of monetary policy, transition from loose to neutral, and simultaneously normalization of budget policy, when additional budget revenues are not going toward expenditures, but to replace borrowing, and so on. All this is right, on one hand, but on the other it's very important to be confident that the economic growth that we're seeing will be sustainable," Reshetnikov said.
"Secondly, there are indeed sanitary and epidemiological risks that have emerged literally in recent days, they must be factored in. Thirdly, one can look at the experience of other western countries, which, even with high rates of both economic recovery and inflation, are not rushing to normalize, tighten monetary policy. They are only discussing when they will start talking about certain tightening measures," Reshetnikov said.
"It seems to us that all these factors need to be kept in mind so as not to jeopardize the recovery that we're seeing and that, we expect, should transition into economic growth," he said.
Nonetheless, the ministry has already begun revising the macro forecast for 2021 and for 2022-2024, he said.
"We have begun comprehensive estimates. Let's wait for more certainty, on one hand. Data for May will now come out; two points are also not a forecast, it would be good to get June data as well. But we've already begun the process of updating long-term forecasts, with the understanding of what will happen and how. While 2022-204 we will already update, calibrate according to all the nuances," Reshetnikov said.
"Plus, we'll see what will happen with inflation. The latest data are 0.12% [inflation for the week]. It was important to us that food inflation, without fruit and vegetables, is holding at 0.05% for the second week, and this is a good indicator on the whole. On the other hand, nonfood is also decreasing, but nonetheless we expect that the certain strengthening of the ruble will also be a kind of anchor," Reshetnikov said.
"And our services component is up and down, quite a bit, from week to week, so we've settled here for now, and the trend is good, right. But year-on-year figures are still rising, because we have a base of zero in June last year," he said.
"We are going along the trajectory, or rather a little higher than the trajectory, but the form is approximately clear. We expected that there would be such a peak in June. Right now the trajectory is higher, which is why we're saying that if we continue to move along it, then it's clear that the final estimate will be higher. I think it's quite obvious that it will be 6% plus," Reshetnikov said.