Expert’s opinion on his expected economic recovery model for Russia

I’m expecting a W-shaped recovery scenario both for the Russian and the global economies. Currently, the growth of economic activity is limited by the risks caused by the large volume of accumulated government, corporate and private debts. Against this background, the recovery of the global GDP is presently not being accompanied by growth in volume of private credits in developed economies, as it is based on the increase in state expenses and, consequently, is connected with weakening of state budgets. 

On the impacts of reduction of governments’ economic stimulus 

The gradual reduction of state economic stimulus measures will unavoidably lead to a reduction in the dynamics of the recovery processes, including the possibility of a relapse. On the other hand, the factors that have caused the present improvement in global investments will remain relevant over the coming years. These factors include an increase in competition, especially in the financial sector, the need for recapitalization by financial institutions from their profits, preservation of long-term risks caused by deficiency of economic resources, increased role of state economic planning and management and international cooperation in the sphere of execution of adopted anti-crisis policies. 

“Gradual reduction of state economic stimulus measures will unavoidably lead to a reduction in the dynamics of the recovery processes, including the possibility of a relapse.”

On the effects of strengthening state oversight in the financial sector

An increase in long-term inflationary risks and strengthening of the administrative control over financial and investment businesses will play a double-edged role in the current economic reality. On one side, and from the mid-term perspectives, these measures will generate an increase in business risks and, accordingly, limit investment activities in the economy. On the other side, the growth in inflationary expectations does not allow investors to plan their market strategies on the basis of low-risk deposits and investments into quality assets. At the same time, the creation of a new financial environment, which fully reflects the current real macroeconomic conditions caused by the tightening of control over the banking sector, means a reduction in market price volatilities and macroeconomic risks in the long-term perspectives.