Russian economic crisis far from over, experts say

By Emre Gurkan Abay and Muhammed Ali Gurtas

MOSCOW

It is early to say that the economic crisis in Russia is over, according to economists.

Tatiana Isachenko, professor at MGIMO University in Moscow, told Anadolu Agency on Friday that she did not believe the Russian economy emerged from the crisis, and the country was trying to get through the crisis with its savings from the pre-crisis period.

"However, we are spending our savings quickly and cannot create such components to substitute those savings," she said.

Isachenko noted that the issue of carrying out necessary structural reforms was still ambiguous, therefore Russian President Vladimir Putin's economy team had to change its strategy in the near future.

"Russian industry needs foreign direct investments. Nevertheless it cannot be accomplished due to political reasons," she said, adding unless the sanctions are lifted, "we cannot achieve a remarkable success, even if we improve our relations with the EU and China".

'The growth is very tiny'

Anton Tabakh, associate professor at the National Research University Higher School of Economics in Moscow, said that the recession in the economy was over but the growth was minuscule.

The Russian economy entered a serious recession along with low income, limited consumption and credits, according to Tabakh.

Tabakh underlined the need for structural reforms against monopolies, the importance of exports with weaker ruble plus more flexible fiscal policy instruments to pull the country out of recession.

'Economy needs time to go back to pre-crisis levels'

Oleg Shibanov, assistant professor at New Economic School in Moscow, said the country's GDP per capita had decreased during the past two years and the economy "needs time to go back to pre-crisis level".

Noting the 0.4-0.5 percent economic growth forecast for this year, Shibanov said: "A substantial recovery in disposable income is not expected in the first quarter of this year. We are cautiously optimistic that Russia will get out of the economic crisis."

Shibanov said an aging population, limitations on oil and natural gas industries, the recessions in the EU and Chinese economies were the key elements of slow recovery.

"For an economic growth, the country needs a new approach to education system, human capital, pension system reforms and heavier technology involvement in the economy," he added.

The Russian economy grew by just 0.3 percent in the last quarter of 2016 after a 2-year recession, according to the figures of Russia's Ministry of Economic Development and Federal State Statistics Service (Rosstat).

In the recent months, the Russian finance and economic development ministers noted that a 1.5-2 percent economic growth was expected this year, above the official forecast of 0.6 percent.

Analysts say that although the growth in the 4th quarter of 2016 indicated a sort of recovery, it was not reflected in disposable income which fell 12.3 percent between October 2014 -- the beginning of the Russian economic crisis -- and December 2016.

According to experts, the contraction in construction and service sectors last year -- 4.2 and 3.5 percent, respectively -- is still seen as a "headache" by the country's economy administrators while the 9.75 percent interest rate is another major obstacle to recovery.