Can the economy recover by 2023: four development scenarios
Against the background of an increase in the number of cases, the Central Bank presented a forecast of how the economy would develop if the pandemic reached a large scale. The regulator highlighted four scenarios, among which there are both optimistic and pessimistic. The worst scenario for Russia is the return of the pandemic and the collapse of oil prices to $25 per barrel. However, analysts believe that even under these scenarios the country’s economy will continue to recover, but it will slow down significantly. Such data was presented by the Central Bank as part of the project of new monetary policy for 2021-2023.
According to the main scenario, the world economy will fully recover from the crisis in 2023. By 2022, the cost of oil will stabilize and will be sold at $50 per barrel. As for the Russian market, it will show good dynamics within 2 years. Inflation will remain approximately at the same level as it is now – about 4%.
The second development option is deflationary. It assumes that quarantine restrictions will be observed in the world for several more years, and by the end of this year the oil price will fall down to $35 per barrel. The latter will grow to $50 per barrel by 2024, and the participating countries will go for OPEC+ deal extension. At the same time, the Russian economy will recover very slowly, consumer activity will remain low and will not reach the level of 2019. The population will save money by reducing large purchases, and business will suspend a number of investment projects. This year inflation will be 4%, in 2022 – 3% and in 2023 – 4%.
With a possible inflation scenario, the cost of oil will drop to $35 per barrel, and by 2023 will rise to $42-43 per barrel. In order to support the Russian economy, the regulator will introduce a number of programs, which will affect the budget policy.
The coronavirus risk variant allows for a powerful new wave of disease, which will lead to a slowdown in the development of global markets. Negative geopolitical processes: trade conflicts, increase in public debt of some countries will also worsen the situation. In this case analysts assume that the cost of oil will fall to $25 per barrel, and the preserved OPEC+ deal will not save the industry much. Only by 2023 can prices be expected to rise to $35 per barrel. Under this scenario, Russia’s national currency will weaken and inflation will be 3.5% by 2023.
Experts tend to consider the first two scenarios as the most likely, but uncertainty about the coronavirus continues to increase.