Russian economy won't begin to improve after reaching the "bottom"

Russian economy won't begin to improve after reaching the "bottom"

The decline in economic activity of Russia has stopped. According to the Ministry of Economic Development, GDP dynamics reached zero in August after dropping by 0.8% in July. It gave the experts a reason to assume that the Russian economy has already passed the "bottom" - overcame the lowest point of recession - and we can expect an improvement in economic indicators in the next two years.

However, rector of the Russian Academy of National Economy and Public Administration under the President of Russia Vladimir Mau believes that overcoming the bottom should not be considered a determining factor: "We are in a qualitatively new situation, which requires to move away from the discussion about the 'bottom'. We have discussed the 'bottom' for the last two years - when our economy will reach the 'bottom', overcome the 'bottom'... Indeed, in traditional economic paradigm, during traditional cyclical crisis, which is well-known to economists and politicians over the past 200 years, this is the correct discussion, since it is based on the fact that when the economy reaches the bottom, it begins to improve. However, the experience of some European countries, Japan, and maybe even Russia shows that we are in a situation that is different from gr

"There are structural problems in the econom, so economic and monetary authorities have to find special answers to make the mechanism of growth work. There won't be automatic restoration. The main feature of structural crises is that they require new institutions, new mechanisms, new instruments that will ensure this growth," he explained.

The economist thinks that the main topic of this discussion should not be the question of whether the economy has reached the "bottom", but whether we have new instruments to make the mechanism of growth work.

"The experience of Japan shows that it is an unusual problem. By the way, Prime Minister mentioned this example in his article on the economy and on Friday in Sochi. He said that we have a clear example of the country, which is not growing for almost quarter-century. It is always around zero, a little higher, a little lower. No macroeconomic manipulations with the interest rate, with monetary policy or with the budget can make this mechanism work. This is the main issue on the agenda."