On Tuesday, November 22, the Valdai Club held an expert discussion titled "The Vectors of Russia’s Macroeconomic Policy," which was attended by prominent economists. The participants discussed the effectiveness of the Russian government’s responses to the macroeconomic challenges of recent years, as well as short-term prospects for the Russian economy.
It was noted that the Government, acting as it did in a crisis, has sought to adapt as much as possible to the country's economy rapidly deteriorating macroeconomic situation. Among the priorities for the most difficult years of 2014-2015 were the stabilization of the balance of payments, limiting of budget expenditures and the tightening of fiscal policy. All of this, along with other measures was intended to create a system capable of protecting the Russian economy from the volatility.
According to one of the foreign participants of the discussion, the government held the economy through the crisis much better than markets had expected. Paradoxically, the anti-Russian sanctions imposed by Western countries helped Russia to adapt to a tighter monetary policy, which is itself part of a global trend. As a result, Russia has already passed through the process that many states have yet to go through, and can be expected to ease its monetary policy
Discussing the global macroeconomic trends, one participant described the monetary policy of the last several decades as "extraordinary". According to him, the world is now moving away from the excesses of this policy in the direction of greater "normalcy." At the same time, in many countries, the politicians who came to power are ready to change the existing rules of the game in the global economy, especially free trade. In this regard, the new US administration announcements on macroeconomic priorities play a special role.
The Russian economy’s fundamental problems were also discussed, including the special role played by demographic challenges. Panelists noted the future reduction of the working population, associated with the low birth rate in the 1990s, and the need to improve the quality of health care to increase the retirement age. It was also noted that the Russian tax system is sufficiently efficient, but the implementation of fiscal policy should be more balanced. Experts drew attention to the large state-owned enterprises, which do not use their resources efficiently enough, adding an additional burden to the economy.
Concluding the discussion, the participants noted that despite the existence of serious structural problems, the Russian economy is largely able to cope with the current macroeconomic challenges and that for the first time in recent years, December will be a relatively calm month. The next year will be transitional for the Russian economy, as the presidential elections and a possible new stage of reforms approaches. In the case of structural reforms, there is the possibility that the Russian economy will grow faster than the predicted medium-term growth of 1-2 percent per year.
