Elvira Nabiullina talks about risks in 2016
The head of the Central Bank of the Russian Federation, Elvira Nabiullina, spoke about the key threats and factors of stability that will influence the Russian economy in the next year.
She stressed that the volatility of the ruble no longer creates risks for the financial stability of the Russian economy, but low oil prices still have a negative impact on it. "Under the influence of external negative factors, the high volatility of the ruble remains present. However, it has decreased since the beginning of the year and no longer creates serious risks to financial stability," RIA Novosti cited her as saying.
Another factor will be the policy of the US Federal Reserve, which will affect the overall volatility of the world markets over the next year. "The focus has switched from a specific date of the rate increase to a long-term horizon of policy. The difference between the market expectations and actual policy of the US Federal Reserve to raise rates could pose risks of capital outflows from emerging markets, such as Russia, and increased volatility in 2015-2016," the head of the Central Bank warned.
Elvira Nabiullina also voiced positive statistics: lending in the economy has resumed, in ten months it grew 7.1%.
"An important condition for raising long-term growth potential of the economy should be the structural changes associated with the overflow of productive resources from less competitive industries into more competitive ones," Nabiullina pointed out.
Under the baseline scenario, GDP will grow from 2017, reaching around 2% in 2018. According to the optimistic scenario, GDP will start to grow next year.
The professor of the RANEPA Chair of Finances, Money Circulation and Credit, Yuri Yudenkov, told Vestnik Kavkaza that the credit growth, despite the crisis, is due to inflation. "Lending fell in real terms and rose only in ruble amounts. Adjusted for inflation, which is more than 10%, an increase of 7.1% cannot be considered as real growth," he explained, adding that the ruble will continue to fall if there are no changes in monetary policy.
According to him, oil prices will continue to have a negative impact on the Russian economy until it starts to develop. "But according to some estimates oil prices will rise only in five years, after the sanctions against Iran are lifted, and in the next month Iranian oil will pour onto the international market, so falling oil prices will continue," Yuri Yudenkov warned.
An associate professor of stock markets and financial engineering of RANEPA, Vasiliy Yakimkin, drew attention to such a current problem of the economy as too high inflation. "Any businessman in the real economy factors future inflation into the prices, and if the volatility of the ruble if high, the inflation will be factored into the prices at the maximum in order to avoid losses. Therefore, the main task of the Central Bank is to keep prices constant, minimize inflation," Yakimkin expects.
He also believes that it won't be possible to get rid of the influence of oil prices on the Russian economy soon. "Now we sell our Urals oil at the price of $41 per barrel, it is a very low price, which creates a lot of pressure on the budget. It is necessary to invest at low interest rates, to give people the opportunity to spin production and develop small and medium-sized enterprises. Then our country will develop very well, because we have the potential: we have brains, the desire to work and the labor force," the expert stressed.