2023-05-14 22:10:00
May 15, 2023 06:10 Source: Economic Daily Our newspaper reporter in Moscow Li Chunhui
Recently, Russian President Vladimir Putin listened to the work report of Russian Minister of Economic Development Maxim Reshetnikov on the macroeconomic situation. Key data such as inflation, public debt and citizen employment show that the Russian economy is running smoothly.
In terms of inflation, Reshetnikov said that Russia’s inflation rate is significantly lower than that of developed countries. Inflation hit a low of 3.5% in March, and fell further to 2.6% in April. Inflation rose 7.4% year-on-year in March in Germany, 6.9% in the euro zone as a whole, 5.7% in France and 5% in the United States. The policy adopted by Russia in 2022 has laid a good foundation for curbing inflation this year. The flexible tariff policy implemented has played a “damper” role, preventing inflation in the international market from spreading to Russia.
In response to high inflation, Russia has implemented a series of measures including raising key interest rates. At present, the overall inflation rate has fallen below the target level of 4%, and the key interest rate of 7.5% has been maintained since September last year. The market expects that the Russian central bank may adjust the key interest rate. Aksakov, chairman of the Russian State Duma Financial Committee, said that the recent decline in inflation indicates that the Russian central bank may make a decision to cut interest rates at the next board meeting.
In terms of public debt, Putin said that Russia’s public debt accounted for 14.9% of gross domestic product (GDP), compared with 121.7% in the United States, 90.9% in the euro zone, 66.5% in Germany, and 111.1% in France. Putin bluntly said, “This is a good indicator.” Reshetnikov said that this is the result of Russia’s consistent macroeconomic policy, and the stable economic situation has given the country more room to take more active actions.
From the perspective of domestic demand, with the growth of residents’ income, consumption demand is also improving. On the one hand, the wages of Russian residents are increasing, with a growth rate of 5.4%. From January 1 next year, Russia plans to increase the minimum wage by 18.5%. On the other hand, social welfare is at the bottom, thanks to pension indexation and other measures . The increase in residents’ income will stimulate further growth in domestic demand.
Import and export indicators also showed stable characteristics. Davydov, acting director of the Russian Federal Customs Administration, said that the data in the first quarter showed that Russia’s imports were progressing smoothly, and the indicators were generally not worse than last year; except for oil and natural gas, Russia’s export volume has not been greatly affected by sanctions . The export volume of some commodities even increased.
In addition, industrial production showed a positive trend. Data show that in March this year, Russia’s industrial output value increased by 1.2% year-on-year. Import substitution in fields including machinery manufacturing, metal processing and food industry is underway. Export-oriented industries are adapting to the new situation and logistics has been rebuilt. Reshetnikov said that Russia is overcoming difficulties in all aspects and the economy is adapting to the new situation.
According to the analysis of the Eurasian Development Bank, in February this year, Russia’s GDP fell by 2.9% year-on-year, and by the end of March this year, the decline narrowed to 1.1%. The slowdown in economic recession was mainly due to industrial recovery. In March of this year, Russia’s industrial production increased by 1.2% year-on-year. Under the background of increased government spending and import substitution, the demand for products from local Russian companies increased. The industrial sector experienced year-on-year growth for the first time in 12 months. The manufacturing industry made a decisive contribution to industrial growth, with a year-on-year increase of 6.3%, of which the food industry increased by 5.5% year-on-year, the oil refining industry increased by 9.3% year-on-year, and the metallurgical industry increased by 8.0% year-on-year. The Eurasian Development Bank believes that the reduction in the magnitude of the economic recession reflects the economy’s adaptation to adverse external conditions, and it is expected that the Russian economy will turn from negative to positive in the next few months.
The report on the European economic situation released by the International Monetary Fund (IMF) in April this year mentioned that Russia has proved to be better than expected in coping with the pressure of external sanctions. At the same time, many European countries are facing the arduous task of economic recession, curbing inflation and maintaining financial stability. The IMF expects that the GDP growth rate of developed economies in 2023 will be in the range of 1.3% to 1.6%. The economic growth rate of developed economies in Europe will drop from 3.6% in 2022 to 0.7% this year and 1.4% next year. An increase of 0.7%.
The Russian Ministry of Economy and Development predicts that Russia’s GDP is expected to grow by 1.2% this year, and next year’s GDP growth is expected to reach 2%, and by 2026, this figure is expected to increase to 2.8%. (Li Chunhui, Economic Daily reporter in Moscow)
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