Russia experts only partly convinced by Putin's optimism
RIA-Novosti
Moscow, 5 December: The three-hour conversation between Prime Minister Vladimir Putin and the people live on air on the Rossiya TV on 4 December was largely intended to calm people. The prime minister announced new measures prepared by the government to soften the consequences of the world economic crisis.
The "social therapy session" can be regarded as successful but one must not forget about macro-economics and lessons which Russia must learn from the crisis, according to experts canvassed by RIA Novosti.
The prime minister promised the Russian people that there will be no mass unemployment in the country, pensions and wages in the public sector will rise, accommodation for the military will be built and an increase in municipal services' tariffs will probably be limited. In addition, the government will resolve the problem of mortgages by using budget money to buy mortgages from banks. Putin also put forward a proposal to use the mother's capital to pay mortgages a year earlier (from 2009).
"The tone of Putin's answers was calming and this is understandable. However, his statement that Russia will get out of the economic crisis with minimal losses is excessively optimistic," head of the Economic Expert Group Yevsey Gurvich believes. (passage omitted) The prime minister, he believes, was wrong not to speak during the session about lessons which Russia is planning to learn from the economic crisis. (passage omitted)
Head of the Centre of Social Research Yevgeniy Gontmakher said the tone of the conversation with people was right. "The aim to make people breathe easier was achieved, and thank God for that. If he were talking to Duma deputies or businessmen, it would have been different," Gontmakher said.
However, the expert believes that the government, distributing help to all and sundry, must not forget about macro-economics; aid must be "addressed to individuals and be efficient".
"Support for the production sector, accommodation for the military, employment services and an increase in pensions - all this is correct, all this should be done but this is not supported by macro-economics. Will there be money to do all this? Are we cutting our coat according to the cloth?" Gontmakher said.
He also said that the government is cutting taxes on the extraction of mineral resources and small businesses' profit, and all this will decrease the budget's revenue.
In view of this the expert thinks that the question of employment benefit, which is planned to be raised to R4,900, should be considered with more care. Gontmakher believes this the benefit should be given to an unemployed person only if all members of his family are unemployed or if is lives alone.
Gontmakher predicts that if the demand for metal and energy drops 50 per cent, the scale of employment in Russia could be much bigger - by the end of 2009 the number of officially registered unemployed could exceed 3m and their total number (calculated using the method of the International Labour Organization) could reach 8-9m. (passage omitted)
Economic expert Gurvich believes the prime minister gave positive signals to people and investors, for instance Putin's suggestion to give banks, through the Mortgage Agency, state guarantees for mortgage credits.
The scale of these measures and their effectiveness is difficult to assess - one needs concrete figures, the expert noted.
According to director of the analytical department of the Bank of Moscow Kirill Tremasov, this is a positive statement. However, the problem of mortgages is not so urgent for Russia as for the USA, the expert said.
"There are not so many mortgage holders in Russia. Many have never heard about this," Tremasov said. (passage omitted)
Putin did not give concrete forecast for economic growth or inflation for next year and only reminded the known figures for the current year.
Gurvich believes Putin was right not to do so, all the more so as the Economic Development Ministry and the Finance Ministry have not prepared their final calculations yet.
"It is difficult to give a forecast for next year because it will depend on the development of the crisis. Against such an unstable background, international financial organizations and world banks are constantly changing their forecasts," Gurvich said. (passage omitted)
Experts' forecasts vary. Analysts at the FBK company are predicting that next year economic growth in Russia will be minus 4 per cent. The director of the department of strategic analysis FBK Igor Nikolayev believes Russia's economy will not start growing even in 2010. "Signs of revival cannot be expected earlier than in 2011 and a full recovery to the pre-crisis level no earlier than in 2012-2013," the FBK predicts.
On the other hand, analyst from the Bank of Moscow Kirill Tremasov believes that the world economy has already reached the bottom and the trend will be reversed already in the second quarter of 2009. (passage omitted) He believes that Russia has a whole range of characteristics which will allow it to get out of the crisis earlier than other countries. "Our country has a growth potential, it has something it needs to build - the infrastructure and social housing," Tremasov said. "As soon as this financial disease goes, credit mechanisms will start working and the economy will begin its recovery," the expert said with optimism.