Moscow News
www.moscownews.ru
September 14, 2009
Is a second crisis wave coming?
By Ed Bentley
Martin Gilman Professor, Higher School of Economics:
The question is whether the recovery in Russia will be shaped like a W or a U. Honestly, we don't know because there are so many interrelated factors at work - just as the severity of the crisis itself was compounded by the unfortunate confluence of various unfavourable developments. In principle, like other large, low-debt emerging economies, Russia should be able to recover rapidly. However, a key weakness is the still too-high rate of inflation, even if decelerating to a projected 10.5 per cent this year, which would undermine the rouble exchange rate. And of course, Russia's recovery will be sensitive to the evolution of the oil price, the strength of the dollar, and foreign demand - all factors beyond Russia's control.
Natalya Orlova
Chief economist, Alfa Bank:
Economic indicators have improved in previous months: industrial output has shown recovery due to higher global demand and a number of banks have observed better payment discipline from their clients. However, fundamentals are still weak with banks' loan books continuing to stagnate, while trade sector output dropped 11.3 per cent in the second quarter of 2009 in real terms. This suggests that the second wave may still come from two areas: either from international markets due to a drop in commodity prices and deterioration of the balance of payments or via an accelerated contraction of consumption, which would push up a liquidity overhang and fuel rouble depreciation even at the high level of oil prices. Even if the third quarter brings some respite, economic statistics still highlight significant risks.
Vladimir Osakovsky
Chief economist, Unicredit:
I do not like to talk about "waves" in the crisis as I feel the main question is whether or not we are about to see the start of a sustainable economic recovery. I think not. Up till now, the major driver of economic contraction has been the sharp fall in investment and external trade, whereas consumer demand - the main component of GDP - has only started to feel the heat of the downturn. Moreover, problems in the banking sector will take much longer to resolve. As a result, I think that the economy is likely to stay weak and go even weaker than now. Another sharp downturn like the end of last year is unlikely, but things might get somewhat worse.
