Coronaries: Russia threatens poverty (Handelsblatt, Germany)

Pandemic coronavirus stronger impact on the economy of Russia. GDP is constantly decreasing, the number of identified infected covid-19 grow, which is becoming increasingly likely second “lockdown”. In this case, already the first wave of coronavirus had for the economy of the fatal consequences. More than a month lasted almost universal ban on leaving the house. Thousands of businesses declared bankruptcy, and this process still continues — with the rapid growth of unemployment.

State budget hole grows, and political demonstrations in the regions exert pressure on the Kremlin. Increasingly, there are protests and strikes, primarily in exhausted by excessive workload health. In the far East, tens of thousands of people come out to protest against the Kremlin, after Moscow dismissed the Governor of the Khabarovsk territory.

President Vladimir Putin is forced to abandon the previously announced important economic projects. Very painful for him personally was the recent tax increase. Shortly after coming to power in 2000, he established a single income tax rate — 13%. It contributed to “out of the shadows” many taxpayers and budget revenues grew rapidly. However, with January revenues of more than 60 thousand euros a year will be taxed at 15%.

In addition, the state, which under Putin still took control of more and more companies, announced a policy of privatization: by 2025 from 1.6 thousands of companies with state participation must, at the request of the Ministry of Finance, to remain only 961.

In addition to this planned sale of major infrastructure projects, particularly ports. Many businesses in the state will reduce its stake to 50% in Russian Railways, company, market pipeline monopoly Transneft, VTB Bank and the monopoly of the alcohol market “Rosspirtprom”.

Putin cuts and private multi-billion dollar plan infrastructure programs, which must now be revised. He abandoned even the most ambitious plan, announced in 2018: by 2030 Russia had to enter the five largest economies in the world.

In the new list key goals for this plan is no more. As said Putin’s spokesman, Dmitry Peskov, the situation has become “less favorable, and we are forced to make adjustments”.

Conditions forced to be realistic

In the second quarter of this year Russia’s GDP, according to the Central Bank, in fact, decreased by 9.5-10%. In the third quarter of economists, for example, Sofia Donets of investment Bank “Renaissance Capital”, are expected to continue the negative trend.

On Friday, the Central Bank of Russia in order to give the economy additional impetus has lowered the refinancing rate to 4.25%. It is at least this Millennium. Next year, Central Bank head Elvira Nabiullina, however, expects GDP growth of 3.5-4.5%, which will mean very slow economic recovery.

The pandemic coronavirus is not behind. In Russia, infected more than 800 thousand citizens. Daily revealed nearly 6 million people are newly infected. The coronavirus had even Prime Minister Mikhail Mishustin and press Secretary of the President Peskov. At the moment, allegedly treated two senators. The mayor of Moscow Sergey Sobyanin constantly has to refute the rumors about the second universal isolation.

The President of the United States Donald trump during a recent telephone conversation with Putin expressed support: “You have to go through hard times, especially in Moscow.” However hardly it became easier.

Coronaries destroyed the savings of citizens

A speedy recovery is not expected because domestic demand was almost nil: the wages of citizens, according to the savings Bank, decreased to the level of the beginning of the century. Unemployment is skyrocketing, and wages are falling. More than half of jobless citizens were forced to accept at least a 30 percent reduction.

Meanwhile, almost half of all Russians had no savings, they spent it all during the outbreak of coronavirus. For comparison, in April the figure was only 14%. 44,6% of the 145 million people in the country are forced to live on 180 euros a month.

Unemployment in Russia has reached an eight-year high, and despite the fact that employees are not fired immediately, but for a start, reduce operating time, together with the salary.

Popular discontent is growing. Diplomats in Moscow are already talking about a “volatile situation” for the usual the success of the Kremlin’s ruler. The fact that they initiated the constitutional reform, according to official data, was supported by 78% of the population, many experts believe no more than the result of fraud.

New state challenge: to overcome the crisis

Now Putin the number one task declared the restoration of the labor market. According to him, it is important to “providing work and income to families.” He, however, virtually no room for manoeuvre: holes in the budget is constantly growing. Economists expect that after several years of surplus in a row the Federal budget deficit will be the largest in the last ten years.

After all, the main factor of decline was not long “lockdown”, and fallen in response to falling demand, oil prices and gas. Concern “Gazprom” last quarter was unprofitable for the first time in decades, and the state thereby lose huge revenues from dividends.

In addition, the price of Russian gas in may fell to 94.4 dollars per 1,000 cubic meters — below the level of profitability. “We expect that the export of gas to Europe in 2020 will be reduced to 153 billion cubic meters, which is approximately 200 billion “cubes” less than in 2018 and 2019,” — said the Director of the division of natural resources Agency Fitch Dmitry marinchenko.

For many years the gas was for the Russian economy a real elixir of life. Now, however, the revenues from the export of “blue fuel” for the first time in the history of modern Russia was lower income from gold exports.