The global financial crisis and economic downturn, one year on: Deutsche Bank
Published: 03 August, 2009, 17:58
TAGS: Currencies, Russia and the global economy, Economy, Finance
With the global financial crisis and ensuing economic slowdown passing its first anniversary, Business RT spoke with Yaroslav Lissovolik, Chief Economist at Deutsche Bank, Russia about how the Russian economy has fared.
RT: How successfully has Russia handled a year of the global economic crisis?
YL: It’s obvious that Russia has suffered dramatically with the real sector falling 10% in 1Q 2009. And the stock market was one of the biggest losers in the developing world. Actually, the current crisis has given us a very important lesson: Russia needs to develop its own financial market with more institutional and household investors there, which will make the market more stable and reduce its dependence on oil and gas revenues, and external shocks as well.
In fact, I think, in some aspects Russia performed much better than other developing countries. Take, fiscal policy, for example. Our Government proved wise enough not to spend its reserves until the crisis broke out, and that money gave our country great advantage.
RT: Which Russian industries suffered the most in the crisis and which proved stable enough?
YL: Obviously, automobile industry and metallurgy have borne the biggest losses, together with the construction sector, which before the crisis was the main driver of Russia’s economy.
Alternatively, natural monopolies, agriculture and mining industries have fared much better than others, with oil and the electric power sector also well afloat. The reason is simple: they just serve the whole economy the basic things, which means demand will always be there.
RT: When do you think the Russian economy will show clear signs of a rebound?
YL: I think, already in 3Q 2009 the Russian economy will start stabilizing and show some improvements, not only month on month, but also in year on year terms, which will last until the end of this year. And consumer demand, I suppose, will become the main driver. However, we expect Russia’s economy to decline some 4 or 5% this year with about a 2% growth in 2010.
RT. How can Russia speed up the recovery?
YL: Firstly, Government expenditure should become more targeted. I mean, it’d better support the most damaged industries in particular, like the automobile industry or construction. But, before that, it’s necessary to conduct preparation work, say, a price correction in the housing market. Rouble devaluation is not the thing we need, I think, but lower inflation and interest rates could really help to revive the credit system. And this is actually what our Government is aimed at the moment.
03.08.2009, 12:51
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03.08.2009, 20:30
Rising NPL’s cast pall over banking sectorRussia's Central Bank says the level of non performing loans in the banking sector reached 4.5% in the first half. But many it's likely to get worse as the Russian economy approaches the anniversary of the crisis. |
"... Where we are left today, dear taxpayer, is a lot poorer. Unless you are a major shareholder and/or bonusable employee of Goldman Sachs. Brains, ingenuity and value creation should be rewarded in all fields, Wall Street included. But when value created is the direct result of the risks borne by others for your benefit, the sharing of benefits needs to be re-allocated. This has not and apparently will not be done, and we, dear taxpayer, are the worse for it. Further, such a crisis could have provided the opportunity and the impetus for a re-look at capital markets risks, getting CDS users to support a central credit derivatives exchange and revised capital rules to incentivize better gap management. The banks lobby like hell against these changes, because it cuts into their fees, notwithstanding the systemic benefits such changes could have on the global financial markets. Banks now lobbying with US taxpayer dollars against changes that could protect the US taxpayer from more harm in the future. Something is terribly wrong with this picture, yet all anyone wants to talk about are executives getting paid too much. It's called missing the forest for the trees, and it is a fixture of both those trying to sell newspapers (get clicks) and run our Government, and it pisses me off. ... nakedcapitalism.com AND "... Everywhere you turn there is evidence of just how bad our economy is getting. Growing unemployment, families that are struggling to put food on the table, and retirees that are having to make the choice between doing without or joining the millions of others that are looking for a job. Unfortunately, many of our economic woes have been created by government intervention and politicians who believe themselves to be economic “experts.” ..." schiffforsenate.com