{"id":891,"date":"2020-12-03T03:12:16","date_gmt":"2020-12-03T03:12:16","guid":{"rendered":"https:\/\/www.radiofree.org\/?p=131254"},"modified":"2020-12-03T03:12:16","modified_gmt":"2020-12-03T03:12:16","slug":"russias-next-economic-shock-likely-to-come-from-impoverished-regions-experts-say-2","status":"publish","type":"post","link":"https:\/\/radiofree.asia\/2020\/12\/03\/russias-next-economic-shock-likely-to-come-from-impoverished-regions-experts-say-2\/","title":{"rendered":"Russia’s Next Economic ‘Shock’ Likely To Come From Impoverished Regions, Experts Say"},"content":{"rendered":"
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The Russian economy’s next shock is more likely to come from its struggling regions than from external factors such as Western sanctions or low oil prices, according to a panel of experts.<\/p>\n

Russia has maintained a lean budget and built up its foreign currency reserves over the years to insulate itself from commodity price swings and additional Western financial pressure.<\/p>\n

However, in the process, it failed to invest enough in its regions, whose health-care systems are now overwhelmed by the coronavirus pandemic, adding to citizens’ frustration with the government.<\/p>\n

“It is ironic that over time [external factors] might actually not cause it. Where they might get the shock actually is the internal shock from the regions, from people who saw that they are being ignored, from the [low] health-care spending, from the lockdowns,” Elina Ribakova, deputy chief economist at the Institute of International Finance, told an Atlantic Council conference on December 2.<\/p>\n

Even during the pandemic, the Kremlin refrained from aggressively tapping its massive foreign-currency reserves to support regions, companies, and individuals amid concern over potential future “external pressure,” she said.<\/p>\n

Russia’s foreign-currency and gold reserves now stand at more than $580 billion, the fourth-largest in the world.<\/p>\n

Vladimir Milov, an opposition politician and former Russian deputy energy minister, said the safety net of individuals, as well as small and medium-sized businesses, had “dried up” due to the low level of government financial support during the pandemic.<\/p>\n

Sergei Guriyev, an economist and Kremlin critic, told the panel the Russian government did not enforce lockdown measures to “preserve the economy, preserve the sovereign wealth fund.”<\/p>\n

Russia’s sovereign wealth fund, often referred to as its rainy day fund, holds almost $170 billion, or about one-third of the nation’s total international reserves.<\/p>\n

Russians ignored the pandemic lockdowns and continued to go to work because the government’s financial bailout measures were “stingy,” Guriyev said.<\/p>\n

As a result, Russia’s economy will decline only about 4 percent this year, better than many developed nations, he said. However, it has come at the costs of lives, he added.<\/p>\n

The government “convinced Russians that they are not dying because official data shows that they’re not. This is pretty scary, but this is how I would explain the fact that the Russian economy is not doing that badly,” compared to developed countries.<\/p>\n

Russia has registered more than 2.3 million cases of COVID-19, the fourth-highest in the world, and more than 40,000 deaths.<\/p>\n

Critics say the government has significantly underreported the death toll from the novel disease, instead citing pneumonia or other illnesses as the underlying cause.<\/p>\n

The Russian economy will struggle to grow in the coming years because the vertical political structure makes the necessary reforms required to drive investment “almost impossible,” Ribakova said.<\/p>\n

Also, a dependency on commodity exports, which account for the lion’s share of export revenues, has generated a “sense of complacency,” she said.<\/p>\n

Milov also gave a pessimistic outlook, saying the consumer-credit boom that had driven the economy in recent years is drying up. Furthermore, the coronavirus has hurt wages, reducing the borrowing power of citizens, he said.<\/p>\n

Sergei Aleksashenko, the former deputy chairman of Russia’s central bank and a Kremlin critic, dismissed concerns that U.S. President-elect Joe Biden would hit Moscow with new sanctions.<\/p>\n

Biden served as vice president when the United States imposed punishing sanctions on Russia for its annexation of Crimea and support for separatists in eastern Ukraine.<\/p>\n

Biden earlier this year called Russia “an opponent” and said he would take a tougher stand toward the Kremlin.<\/p>\n

Aleksashenko said the world has changed since Biden was vice president, with China now becoming Washington’s main rival.<\/p>\n

The Biden administration will not want to take on two powers at the same time, he said.<\/p>\n

Additionally, the Biden administration will want to reach arms-control deals with Russia and new sanctions would only undermine talks, he told the panel.<\/p>\n

Unless President Vladimir Putin undertakes foreign aggression, such as against Ukraine or Belarus, the United States is unlikely to impose fresh sanctions, he said.<\/p>\n\n

This post was originally published on Radio Free<\/a>. <\/p>","protected":false},"excerpt":{"rendered":"

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