Page 16 - RusRPTAug24

Others believe overheating will simply fade away. “Overheating often cools by itself. There is a school of economic thought which says that if you treat a cold yourself it will go away in a week, and if you don’t it will last for seven days,” said the chief economist. Analysts from Moscow’s Center for Macroeconomic Analysis and Short-Term Forecasting, an independent research organization, agree there is no recession on the horizon.
To prevent the public from noticing an end to overheating, Russia will need to adopt specific fiscal and monetary policies, according to the chief economist. But the authorities have only limited options. Russia already has a tight monetary policy, and a tight fiscal policy is written into the 2025 budget. Moreover, companies do not have infinite resources to keep raising salaries – and consumers cannot endlessly increase consumption.
Economist Kiselev believes that an end to overheating could result in a possible major correction to prices, or the exchange rate, but there will be no major banking crisis of the type some were predicting following the full-scale invasion of Ukraine.
Why the world should care
While there have been some dire forecasts, most economists now seem to think Russia’s economic authorities will be able to manage whatever comes after overheating. This will come at a cost, however. “The state will neutralize the risk of a financial crisis but, in the future, will have to capitalize loss-making companies and banks,” said Kiselev. “At the end of the day, all that financing will be at the expense of taxpayers and investors.”
Via The Bell
16 RUSSIA Country Report August 2024 www.intellinews.com