Page 22 - RusRPTAug24

doesn’t seem to be happening. The reasons for this are a subject of disagreement.
Economist Georgy Zhirnov has suggested that the failure of high interest rates to impact the economy is down to high levels of “non-market” borrowing, especially state-subsidized mortgages. Many other economists agree. However, Zhirnov has also pointed out that, in the first half of this year, the volume of approved mortgages was down 60% on the equivalent period in the previous year. This suggests high interest rates are having an effect.
One Russian banker highlighted to The Bell that certain sectors of the economy are also receiving subsidized loans – particularly, agriculture and manufacturing. “We estimate the discount at 1.5-2 percentage points,” he said.
What happens next?
There is no clear consensus about what might happen when the economy stops overheating. Many have walked back more dramatic predictions of a banking crisis, or deep recession. Most believe the Kremlin will be able to contain the fallout.
It’s true that a positive output gap (when actual output is more than full-capacity output) can end up in a recession. And this scenario has been widely discussed on influential economy-focused Telegram channels like “Hard Figures” and “MMI.”
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22 RUSSIA Country Report August 2024 www.intellinews.com