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Russian Economy will Need Four Years to Recover from the Crisis
July 17, 2020 10:32

The world economy will be able to return to pre-crisis levels in 2022, while the Russian economy - only in 2024, analysts of the Economist Intelligence Unit (EIU) predict. Recovery will be hampered by low raw materials prices, experts warn.

For the global economy, 2020 and 2021 will be lost due to the coronavirus epidemic; it will not be able to return to the pre-crisis level until 2022, analysts at the Economist Intelligence Unit (EIU) predict in the report “Third quarter recovery: what will it be?”. EIU analysts classify Russia as one of the countries where the economy will recover more slowly, along with Japan and South Africa. These countries will be able to reach the pre-crisis level only in 2024. At the same time, most of the G7 countries will be able to compensate for the losses associated with the current crisis in 2022. Brazil will be able to recover in 2023, while China will manage to avoid a recession in 2020 and record growth of about 1%.

“For Russia, getting out of the coronavirus crisis is complicated by falling energy prices. Therefore, the recovery of the domestic economy will proceed with some delay in comparison with the pace of the world economy and, accordingly, will depend on the demand for energy resources,” Ruben Yenikolopov, the HSE Rector  said. The situation is aggravated by the fact that the Russian economy experienced serious structural problems even before the crisis, which have not disappeared, and the country's leadership has not yet announced specific plans to resolve the accumulated problems, he adds.

In developed countries, a stronger decline in GDP is expected in 2020 compared to the Russian economy, so a mechanical recovery in business activity in 2021-2022 will give them higher formal growth rates, Oleg Shibanov, the HSE professor notes. According to the IMF forecast, Russia's GDP by the end of 2020 will decrease by 6.6% (the official forecast of the Ministry of Economic Development is minus 4.8%) compared to a decrease of 8% in the US GDP, by 7.8% - in Germany, 12.5% - ​​in France and 12.8% -  Italy.

Bouncy rebound in the third quarter

Most economies will actively recover in the third quarter, when they record double-digit quarterly growth rates, analysts at the EIU say. The EIU predicts that  the Russian economy will grow 11% qoq in the third quarter, compared with a 15.5% decline in the second quarter. The fastest recovery in BRICS countries is expected in the third quarter in India (16.4%). Among the developed countries, the economies of Great Britain (18.6%), France (12.6%) and the USA (13.2%) will recover most actively.

The third-quarter recovery will come amid a low base following the economic shock from the epidemic in the second quarter. "The impressive growth rates in July-September 2020 will mean little," EIU analysts warn. The quarterly growth rates reflect the countries' reaction to the coronavirus epidemic, when many industries, primarily the service sector, were virtually paralyzed, and the lifting of restrictions will lead to a rebound in indicators that will go into red at the end of the year, Vladimir Salnikov, economist at the Center for Macroeconomic Analysis and Short-Term Forecasting says.

Author: Anna Dorozhkina

Tags: Russian economy economic crisis Russian companies Russian business coronavirus 

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