Alexander Abramov: Inflation is dangerous with its uncertainty

Professor of the Department of Stock Market and Investments of the Higher School of Economics Alexander Abramov shared his opinion on what the economic results of 2023 were and what, in terms of the impact of the economy on reality, we expect from 2024.

Alexander Abramov, Head of the Laboratory for Analysis of Institutions and Financial Markets at the Russian Presidential Academy of National Economy and Public Administration

– In general, I believe, 2023 from the point of view of the economy was a success. Because economic growth turned out to be more than 3%, closer to 3.5%, which no one really expected. In general, the ruble did not fall so much and managed to win back some of the losses.

The budget deficit is also quite within normal limits, below those benchmarks that are considered dangerous. In addition, real wages have grown, and many parameters of the economy were higher than expected and quite optimistic.

Something, of course, failed. First of all, inflation raises questions. But I can say that it is not so much unpleasant with its rather high level, since 7.5% is not such a large level. It is unpleasant in its uncertainty, since the reasons for high inflation are not eliminated, in particular – the supply of goods cannot grow in unison, in accordance with the demand for these goods.

These moments remain quite tense. The price of oil and the corresponding revenues of foreign currency earnings to the budget also remain volatile, all this adds difficulties to the assessment of the economy. All these uncertainties persist and cause, I believe, even excessive criticism of the Central Bank. However, in general, the results of the year from the point of view of the economy can be called more successful than what was expected at the beginning.

As for the economic prospects for 2024, the beginning of the year, I believe, will be more or less normal in terms of the main indicators. But I think that in society there are fears that after the presidential elections in Russia, various levers of economic management may weaken. Moreover, at the beginning of the year, the economy will have to survive increased budget expenditures, since, for example, they advanced the growth of defense industry production. This, of course, can affect the surge in inflation.

The prospect of how the imbalance of supply and demand, primarily supply, will be resolved is not very clear. And how volatile foreign exchange earnings will be is also unknown.

I still have a relatively optimistic view of the economic situation. And I assume that in general, everything will be fine in the Russian economy in 2024: with the ruble exchange rate, with the price of oil, and with budget revenues. But the only thing that is unlikely to reach is the 4% inflation target. Most likely, the consumer price index, I think, will be about 5-6%, since it is difficult to imagine how to remove imbalances from the supply side in a year.

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