What awaits Russia in 2020: is analytics relevant + what to expect this year + is the situation in the Russian Federation so dangerous?
“This year turned out to be difficult” – usually after such a phrase, the president begins to list the things and events that led the state to its current state at the end of the year.
Will this year be really challenging? Definitely will.
But what awaits Russia in 2020? Today, based on current facts, we will try to predict the development of further events.
Do you need analytics?
Before discussing the issue itself, I would like to add something to the preface: at the moment it is possible to analyze the current economic and political situation without any problems, although this may cause some difficulties, it is simply impossible to make 100% accurate analytics by the end of 2020.
Such forecasts will look at least stupid and ignorant, since they do not take into account the events that may occur throughout 2020, and starting from the dynamics with which the new economic crisis is developing, in the middle of summer such “expert” opinions will seem to you at least funny.
It is possible to understand the logic of events, for example, that the collapse of X will be followed by the collapse of Y, but it is not clear what events will occur between them, and whether this will affect the final result. At the same time, the flaring COVID-19 epidemic is making its contribution, and it is not yet clear what is more dangerous for society – a new virus or a global economic recession?
Only one thing is clear: both COVID-19 and the economic crisis have already begun to destroy our established socio-economic ties, and both of these scourges have not yet reached their greatest potential.
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What awaits Russia in 2020: a detailed explanation, facts, charts
Nevertheless, now anyone can understand that 2020 will be a rather difficult year for Russia: in March, futures for trading in Brent and WTI crude oil fell to their minimum of $ 24, Urals grade is sold on the exchange for less than $ 20, and some bituminous oil brands, for example Oregon Sour, are sold almost with a surcharge from the company.
Many experienced investors and traders agree that world oil prices will stabilize by the end of summer at around $ 55-65, and during the autumn-winter trading sessions, active beating off of the lost capital will begin.
Not the least role in the global drop in oil prices was played by the spread of the 2019-nCoV virus: due to the emergency measures taken by a number of the largest states regarding cargo transportation, global trade turnover has already fallen by 6.2%, while analysts predict a total drop in trade revenues to 16 % by the end of this summer.
The same situation is observed in the tourism sector, although, in this case, the psychological factor is more to blame for the reduction in traffic. One thing is certain – as soon as quarantine measures stop, passenger and freight traffic between countries will resume with renewed vigor.
At the same time, the reluctance of the Russian leadership to get off the “oil needle” will play a cruel joke on the country’s economy: according to the Federal Customs Service of the Russian Federation, in 2008 the share in the export of crude oil and natural gas was 32.40% and 14.19%, respectively. In 2019, this value only increased – by 3.5% in annual terms, that is, up to 53.2% in total.
According to the Ministry of Finance, in 2019, in the same periods from January to March, Russia’s revenues from oil and gas exports were 3 trillion rubles higher than in 2020.
At the same time, the national currency is trying to keep up with oil – the mark of 80 rubles per dollar has long been passed, and it is not a fact that the value of the domestic currency will not fall even lower. The same applies to inflation: the Central Bank of the Russian Federation predicts its growth to 7-8%, that is, this is already twice as much as it was in December 2019.
The most important problem for Russia will be the shortage of public funds: GDP may fall by 1-1.5%, thereby rolling back to the state at the end of December 2018, while the volume of export revenues will fall. According to preliminary forecasts, revenues will decline to $ 380-400 billion, that is, to the level of early 2019.
Important: according to the statements of the head of the Ministry of Finance Anton Siluanov, which sounded on March 18 at an expanded meeting of the board of the Federal Treasury, a deficit is expected in the state budget of the Russian Federation in 2020.
He also added that “because of the coronavirus, entire sectors of the Russian economy are shrinking.”
At the end of December 2019, the total export volume decreased by 5.6% compared to the same date last year. The decrease in the volume of trade with the EU decreased by 7.2%, while the geographical structure of trade of the Russian Federation continues to shift further to Asia, in particular – China, India, Indonesia.
The most tangible changes will be related to the social sphere. It is likely that all state reserves will not be enough to keep all guaranteed payments at the same level under conditions of complete quarantine.
At the same time, a recession is not yet a death sentence for entrepreneurs, especially for small and medium-sized businesses. Even in economically difficult times, there is an opportunity to open and successfully develop your own business, thereby not only saving money during the crisis, but also increasing it.
It might seem to some that this situation is unique only for Russia, and the rest of the world, although experiencing problems with the economy, is still not at the same level as the Russian Federation. Is the current situation so dangerous? Let’s figure this out too.
What awaits not only Russia, but also the world in 2020?
Even a schoolboy understands that constant growth is impossible in an economy. A period of prosperity and development is always followed by an economic downturn. But even in moments of the most dangerous recession, the state’s economic rollback does not exceed 2-3% of GDP, which is just a couple of years of stable development. But what if we are on the verge of something more than just a global crisis?
Analysts around the world have been expecting a slowdown in economic growth for as long as 3 years, followed by a long-term recession, which, based on the 2008 scenario, will continue until at least 2021.
What do we see in the end? The faulty policies of the world’s central banks, which ramped up a total of 300% of their initial funds between 2010 and 2019, helped to cope with the 2009 recession and provided the foundation for an economic boost in the subsequent period, but made all global ties extremely vulnerable to any significant crisis.
15 indices indicative of the global crisis in 2020
The largest market players, including the US Federal Reserve, the European Central Bank and the Bank of Japan, weakened by the decline in interstate economic ties, can no longer resist recessive sentiments. And it will take at least 12-18 months to “reshape” the established system.
According to the statements of the new ECB President, Christine Lagarde, the EU is ready to “turn every stone” to restructure the established monetary policy, the process of “redrawing” itself began in the ECB in September 2019, but due to the outbreak of the COVID-19 epidemic, this process may be delayed …
World globalization has led to the fact that the central banks of the largest powers have become dependent on each other. Thus, the total volume of reserves of the Bank of Japan is 102% of the total GDP of the latter, and the ECB – 43%.
In 2019, the total global GDP amounted to 85.8 trillion dollars, while the combined power of the first five countries (USA, China, Japan, Germany and the UK) is 45.6 trillion dollars, which is already noticeably more than half of global GDP.
The International Monetary Fund believes that a global recession begins when GDP growth drops to 2% per annum, and a serious economic crisis – to 1.5%. At the same time, the real growth of the “first economies in the world” at the end of 2019 ranged from 1.3% to 1.8%, which already tells us a lot. At the same time, even according to the most daring estimates, global GDP will decrease by $ 8-12 trillion, and this is already an incredible blow.
And as soon as the largest economies enter the “steep peak”, the whole world will follow. And what, in this case, can only Russia oppose?
In the best case, it is to get out of the crisis with the economy rolling back to the level of 2018. At worst, it will be seen further.
So far, only one thing is known for sure: in our “happiness” we will not be alone and, on the whole, Russia is more prepared for difficult times than the Western countries favored by the good life, against which the system, which they themselves created, is now playing against.
Business in crisis
Assessment of the likelihood of a new economic crisis, 15.10.2018.
What came true and what did not come true is up to you:
And what is the bottom line?
No matter how optimistic our sentiments are, now no one doubts that in 2020 Russia, and that there is Russia – the whole world will face difficult times. And it is necessary to perceive this problem not only as a national one, but also as a social one.
What awaits Russia in 2020? An increase in prices for almost everything, a reduction in social benefits, a reduction in jobs, the option of extending quarantine measures for an additional 1-2 months is quite justified, the introduction of new tax laws is quite likely, and with an increase in economic stagnation or with a new round of the spread of COVID-19 – more. more difficult social situation.
But it is important to remember that literally the whole world will experience similar processes, and there is no getting away from this, even if humanity had settlements on other planets – and they would not have avoided the effect of the situation that is gaining momentum in the world.
Take care of yourself and your loved ones, and remember – only together can you cope with the crisis, no matter how difficult it may be.