The Russian economy, on a par with the world economy, has become one of the main topics of the last day of the World Forum, which ended in Davos on January 20. At the site, they called for tougher restrictions against the Russian Federation. Deputy head of the European Commission Valdis Dombrovskis said a price ceiling for Russian oil products may be introduced as early as February. According to the calculations of the West, this should exacerbate the recession in the country and shake its economy. But experts interviewed by Izvestia noted that all the worst predictions about the collapse of the Russian economic system did not come true. And after a recession, as a rule, there is an increaseanalysts added. How the forum participants see the future of the world economy and why they are afraid of the possible growth of China’s GDP – in the material of Izvestia.
And again about sanctions
On the final day of the 53rd World Economic Forum in Davos, its participants discussed scenarios for the development of Russian markets. This year, the Russian delegation did not come to the event due to sanctions.
For the first time, the forum devoted a separate session to Russia. The main topic of discussion was the impact of Western restrictions on the country.. According to Czech Minister for European Affairs Mikulas Beck, sanctions against the Russian Federation will not help stop the conflict in Ukraine. In addition, many states have not joined them.
— Sanctions are and will be bypassed. There will be countries that don’t respect them– says Mikulas Beck.
According to him, Imposed restrictions are a way to buy time to rebuild Europe’s energy infrastructure and improve the EU’s defense capability through the development of the military industry.
Nevertheless, Western sanctions still affect the Russian economy, so they need to be tightened, says Ken Rogoff, professor of economics at Harvard University. As the expert noted, the level of employment and budget revenues of the Russian Federation indicate a decline in the country’s markets. Russia’s economy is helped to keep afloat by record high energy prices, said Valdis Dombrovskis, Vice-President of the European Commission. It is important to continue to put pressure on Russia’s commodity sector through sanctions, he stressed.
— The European Union and the G7 are a bit late with the embargo on Russian oil and limiting its cost. Negotiations are now underway to introduce a price ceiling for petroleum products. I hope this can be done next month– said the Commissioner, who expects that the Russian economy in 2023 will be in recession.
Russia is already at this stage – this is a normal phase of the economic cycle, said Georgy Ostapkovich, director of the HSE Center for Market Research. Typically, a market economy develops in four stages: boom, boom, bust and recession – all countries go through this, he explained. Russia’s GDP in 2022, according to preliminary estimates, decreased by 2.5%, Vladimir Putin said. According to the forecasts of the Ministry of Economy, in 2023 the reduction will be 0.8%.
All the worst predictions about the collapse of the Russian economy did not come truesaid Aghvan Mikayelyan, Managing Partner of FinExpertiza. Despite the unprecedented nature of the sanctions, the country’s financial system has held its ground, production and supply chains have largely recovered, and business has begun to reorient export-import operations to new markets.he explained.
Cautious optimism
The main topic of the last day of the Davos forum was the future of the world economy. The situation is not as bad as feared in the West, said the head of the International Monetary Fund (IMF) Kristalina Georgieva. According to her, There are several reasons for optimism: declining inflation, rising consumer demand, as well as possible growth in China’s GDP.
According to IMF forecasts, the global economy will grow by 2.7% in 2023the expert continued. However, this is one of the worst indicators in recent years, in addition to the 2008 crisis and the pandemic.she noted. The head of the fund added: we need to be careful with expectations, as there is no clear understanding of how inflation will continue to decline. In addition, one cannot ignore the uncertainty of the geopolitical situation in the world. And finally The acceleration of China’s economic growth could increase commodity prices, which is likely to lead to a jump in inflationemphasized Kristalina Georgieva.
China’s economic growth will mean an increase in the consumption of energy resources, most of which are supplied to the country by Russia, explained Aghvan Mikaelyan from FinExpertiza. He continued: both countries have a huge domestic underconsumption, which is not in Western Europe and the United States, so they can bet on the closure of domestic demand – this will increase the pace of economic development. At the same time, this potential is less in developed economies, since in these countries, on the contrary, overconsumption and high inflation due to excess monetary liquidity, the expert concluded.
Meanwhile the global economy needs to avoid fragmentation and trade wars “This requires that all countries, including China, adhere to the restrictions,” French Finance Minister Bruno Le Maire said during his speech. He believes that in the past three years, the world has moved from “market-driven” globalization to “political power-driven” globalization.
Claims that the world economy is becoming more dependent on politics are far from reality, says Natalya Milchakova, a leading analyst at Freedom Finance Global. According to her, the free market has ceased to exist since the advent of the Bretton Woods monetary system in 1944, when in fact the rates of almost all world currencies were pegged to the US dollar. But this is the national currency of one country, so it is incorrect to say that until today the world economy has never depended on politics, the expert noted.
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