The authorities cannot simply turn a blind eye to the negative processes occurring in the economy. However, the classic economic consequences of a poorly managed state economy in conditions of a “special military operation”, that is, war, are already beginning to appear in Russia – and will only get worse. Russians They realized that the national currency, the ruble, was depreciating rapidly and unexpectedly It is better not to deal with it.
How do you analyze the wartime economy?
I’m trying to find indicators that will help us understand the situation in Russia. Of course, we look at the ruble exchange rate – It still acts as an indicator – and on the dynamics of retail purchases. We pay attention to the data about Transport volume Rail goods, status Labor marketabout debts Loans.
According to official information, the Russian federal budget is in better shape than economists expected. However, this situation is allegedly improving amid the devaluation of the ruble, which means higher inflation. This, in turn, will lead to increased spending for Russia – during inflation, it increases not only for the population, but also for the state.
Market in Rostov-on-Don
Inflation will continue to run
When accelerating inflation appears, two scenarios also emerge. The first is bad and the second is worse.
Firstly, People realize that the national currency, the ruble, is falling rapidly and unexpectedly It is better not to deal with it. So they will get rid of the ruble in favor of foreign currency, which will begin to play the role of “real” money circulating in the economy. This situation has already happened – in the 1990s, there was a practice in Russia of setting prices in dollars.
Second, what is already happening to oil producers will become commonplace. It would not be profitable for anyone to sell anything. The Russians will keep the goods in warehouses. It will automatically become more expensive. People will gradually sell these items to cover their current expenses.
After all the products are sold, the Russians will have to produce more goods — But inflation will still accelerate and it is not known whether there will be enough money from sales for production.
What will Putin do before the elections?
As a result, most of the goods will remain in warehouses and their prices will rise day by day. This in turn will lead to a decline in production and trade, thus destroying the economy. It is a simple mechanism that is described even in textbooks – and soon students will be able to learn it using the example of Putin’s Russia.
There is only one thing that can change this drowning situation. Vladimir Putin, in order to stay in next year’s election race, may have to reassure the population in some way, for example by Paying additional social benefits to a poor community. All of this will naturally lead to accelerating inflation, but only after the presidential elections.
Then it becomes possible to say that all the problems facing Russia are due solely to the hostile environment. I remember such statements well from Soviet times.
*Igor Lipsky is a doctor of economics and a former lecturer at the Moscow Higher School of Economics. In 2023, he ended his cooperation with the university. He opposes censorship in universities – in an interview with the Russian portal Znak.com, he said that patriotism does not mean remaining silent about economic problems, but finding ways to solve them.
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