Economics

An import reduction has a more than proportionate impact on Russia’s industrial output and exports. Over one year, a 1% decrease in imports as a share of production costs across industries leads to a more than 2% output reduction and an even more significant decline in exports.

Why should we expect a slowdown of the Russian economy, what traps has it fallen into, what will help curb inflation, and what are the fiscal policy risks? These issues were discussed by economists at the Financial Congress of the Bank of Russia.

Modern technology and big data on retail sales enable more accurate and faster measurement of inflation. We are developing a methodology for calculating a price index based on data from online receipts: in the future, it will make it possible to track inflation in near real time.

Human capital is one of the key factors of economic growth, but there are few quantitative estimates of its contribution to the Russian economy. New estimates show that its contribution peaked in the second half of the 2000s and had almost disappeared by the end of the 2010s.

In a geographically large economy, different regions can respond differently to the same events. Nowcasting used for data across Russia revealed these differences as well as their dependence on the level of development and the sectoral specialisation of the regions.

There is not a single industry in Russia in which the overhang of job vacancies is not rising. Although the renewed growth of real wages will reduce this overhang, the labour shortage may persist for many years, according to Rostislav Kapeliushnikov, a labour market expert.

The number of educated and employed women in Russia is high by world standards. Russia is among the world leaders for the share of families with a woman as the main breadwinner. The weak role in governance and large pay gap are paradoxical, but have an institutional explanation.

The past two years saw an almost complete transformation of the logistics and geography of Russia’s export and import. Analysis of this process has identified a number of patterns and risks in the new structure of foreign trade.

In terms of concentration of wealth in the hands of a small group, 1% of the population, Russia is among the world’s leaders. This group is almost inaccessible for sociological analysis, but a few assessments can be made from open sources.

Many indicators point to a rise in economic uncertainty, but it is the news that reflects this trend most quickly. The index based on media archives has accurately shown all crises in the 21st century and made it possible to calculate their consequences for the economy.

After a period of record growth in 2022, gas spot prices in the European market have returned to the levels seen two years ago. Europe has managed to adapt to the reduction in supplies from Russia, but price volatility and consumption risks persist.

The inflationary episode that has been experienced by all developed countries since 2021 is not over. The risk of losing the inflation anchor and falling into the stagflation trap exists even though the effects of pro-inflation factors have almost completely worn off.

Entrepreneurship in Russia has shown great resilience to changes in the political and economic landscape: the influence of institutions and culture on business activity may persist even after extreme changes in political and economic conditions.

International sanctions have accelerated the transformation of the labour market which started during the pandemic. The market has moved from limited demand to limited supply, and this situation will persist for a long time, labor market expert Rostislav Kapeliushnikov says.

No one will argue that the financial sector affects the real one, but the number of answers to the question of how exactly it does so is almost the same as the number of economists. A problem arises in finding indicators that characterise this influence quite fully.

The reliance of Russian economic sectors on imports is relatively low and does not exceed the median for other countries, a study has found. However, 60% of Russia’s imports come from the countries that have announced sanctions against Russia.

Gravity exists not only in physics, but also in economics, and just like in physics, its laws are objective. It is far more important for small and medium-sized economies to maintain and develop economic ties with the largest economies than vice versa.

Many Russian firms prioritise their market position over productivity growth; low competition and high entry barriers reduce their incentives for innovation. This approach extends the life of inefficient businesses whilst undermining the sustainability of efficient ones.

Demography is one of the factors influencing potential economic growth. Potential growth increases in tandem with the birth rate, which is closely linked to the increase in household income.

One in five of Russian professionals with higher education and permanent employment are impoverished or low-income. According to the HSE, poverty among professionals, which seemed to be a thing of the past, is now returning, and the crisis may exacerbate it.

Transition to a low-carbon economy remains a priority for major countries including China despite the rises in commodity prices and the highest global inflation. For Russia, as its economy refocuses on Asian markets, the importance of the green transition still holds.

The index, developed by the Bank of Russia on the basis of surveys of enterprises, enables real-time assessment of the Russian economy and its sectors. It displays a high correlation with GDP, coming out in advance of it in terms of the timing of the publication of statistics.  

The Fed waited too long to tighten the policy in its anti-inflation stand, believing the acceleration of prices to have been temporary. The biggest concern for markets now is whether the Fed could avoid another policy mistake with regards to over hiking interest rates.

Russian businesses have faced foreign counterparts’ refusal to continue cooperation, suspension of imported components and the rising cost of logistics. Companies are looking for alternative production and logistics chains, the Bank of  Russia survey finds.

In March, the Russian economy entered a downturn phase triggered by the impact of all-out foreign trade and financial sanctions and restrictions. If they continue, the economy will lose some of its potential, and the recovery will be protracted.

It was by chance that David Card, the 2021 Nobel Prize winner, became an economist. Academic journals turned down his works, and his friends thought he had broken up the foundations of economic theory. But if a theory doesn’t fit the evidence, there must be an alternative theory.

Uber and Lyft once promised to replace personal cars and do away with traffic congestion. However, some municipal authorities believe that these services have only exacerbated traffic jams. Research shows that their impact on road traffic depends on the ‘design’ of cities.

Russians have passed through several stages in their emotional feelings during the corona crisis: fear and respite gave way to a return of tension, which is ongoing. For all the stress that an uncertain future has caused people, a certain adaptation to the pandemic can be seen.

Many researchers believe that the costs of hosting the Olympics are not recouped, and this is one of the reasons behind growing scepticism towards the Games. However, the Olympics often provided a stimulus to economies: it is all about how to take advantage of the Olympic legacy.

The rector of the New Economic School on what the features of the platform economy are, how competition leads to monopolization, what the reasons are behind the anti-platform crusade led by national regulators, and whether we should expect the world to become one big super app.

The gender pay gap can be explained by many reasons. A data study on Russian graduates showed that the dominant reasons are segregation and self-selection of women in low-paid specialisations.

The changes in the Russian labour market caused by the corona crisis have been largely temporary, but some of them may take hold and become the ‘new normal’. Sustained changes in the labour market will also affect inflation in the Russian economy.

Inequality remains a sore point in socio-economic development, but society's key demands for justice have more to do with inequalities of opportunity such as equality before the law and equal access to healthcare and education, than with the elimination of income inequality.

Changes in private and social life caused by the pandemic have reignited scientific interest in gender inequality in the labour market. Russian economy has adapted to the crisis mainly through price adjustment, and this means the gender pay gap is likely to grow.

Digitalisation is changing the payment market and consumer behaviour in many countries. This raises the question of whether it would be expedient to introduce an additional form of money that would meet the requirements of the digital age: a central bank digital currency.

During a crisis, real-time data is particularly important: the economic situation requires prompt governmental and regulatory decisions. Industry-specific financial flow monitoring developed by the Bank of Russia allows analysis of business activity on a daily basis.

The EU carbon tax on imports that is to be imposed in 2022 may affect almost 42% of Russian exports. The private sector and the state should take active measures to maintain economic competitiveness in the world of growing climate risks.

In Russia, returns to schooling are almost 50% lower than the global average: each additional year of schooling provides a relatively small increase in wages, which declines over time, World Bank experts have found.

Changing attitudes, aptitudes to reassess conventional ideas, and greater intellectual tolerance predetermined the Industrial Revolution and later, Europe turning into the world’s major economic centre, argues economist Joel Mokyr.

Modern surveys help economists get into people’s minds: it turns out that people’s perceptions of the economy are not in line with reality, which in the end, can undermine economic policy, argues Stefanie Stantcheva, professor at Harvard.

Capitalism is not driven by the selfishness and greed of the homo economicus but by decentralized decision-making that allows for experimenting and learning from one another, and the future lies with unity of purpose and mutual support, argues Paul Collier, professor at Oxford.

The languages people speak affect their worldviews and economic behaviour. Thinking in a foreign language helps people make more rational decisions.

Unlike Russian citizens, immigrant workers in Russia have faced massive layoffs: about half of them have lost their jobs during the lockdown but a study shows that almost no one is thinking of leaving.

Economics distinguishes inequality of outcomes and inequality of opportunity. The latter is both unfair and inefficient.

The unprecedented crisis will require fundamental changes in Russia’s fiscal policy. Financing anti-crisis measures will involve not only using the National Welfare Fund, but also moving away from fiscal rule and using unconventional fiscal and monetary tools.

Most Russians believe that loans make their life tougher, but almost 50% of households have outstanding loans. Many borrow impulsively without regard to consequences, although the majority manage to pay them off.

Analysis of recent social changes in Russia shows that Russians are actively moving between income groups. However, it suggests a precariousness of even modest prosperity, rather than real accessibility of top income groups.

Bad debts can be both a consequence of the borrower’s reduced financial circumstances and an instrument of unfair banking. Each of these problems has its regulatory solution but the key principle should be market responsibility of the owners and managers.

A sound banking system, a moderate bad debt level, prompt recognition of the problem which bad debts pose and dealing with them effectively, are essential preconditions of not only financial stability and depositor protection but also of economic growth.

Non-commodity exports have slumped, and their fall can no longer be offset by oil and gas. Demand for Russia’s goods is decreasing as its trade partners’ growth slows.

The global economic slowdown is becoming a key threat to financial markets. The measures taken by central banks may prove insufficient to prevent a negative outcome.

The large-scale National Priority Project in housing has the potential to cause an accelerated increase in real estate prices, household debt, and banks’ credit risks. Moreover, explosive market growth could give way to a slump when the Project comes to an end.

Inflation targeting might support economic growth by lowering inflation and volatility. However, monetary policy alone cannot drive growth.

Analyses of poverty and well-being depend on the methods used to assess the social structure of society. The most suitable methods for Russia are methods applicable to developed countries – but the results of these methods show a decline in living standards.