Russia is entering the second decade of economic stagnation. And you will have to pay for it again – with poverty or even the next collapse of the country.
A group of Russian economists and political scientists published the report “Stagnation-2”. Researchers have analyzed the state of the Russian economy, its prospects and proposed methods for renewing growth.
The authors of the report were Konstantin Sonin, professor of the University of Chicago and the Higher School of Economics, Natalya Orlova, chief economist at Alfa-Bank, Sergey Guriev, professor of economics at Sciences Po, Sergey Aleksashenko, former deputy chairman of the Central Bank of Russia, Ruben Yenikolopov, rector of the Russian School of Economics, Oleg Itskhoki, professor of economics at the University of California, and others.
The authors of the report call the current situation in the Russian economy long-term, or stable, stagnation. They conclude that if the country’s economy is not reformed, it will face another (already second) “lost decade” in the form of one of three scenarios: a long slow slide down ( “Stagnation-2”), long-term instability (“unbalancing of the 2020s”) or a full-scale demolition like the Soviet one (“crisis of the 2030s”).
Stagnation-2 is not only a perspective, but the current state of affairs. In Russia, real incomes of the population have been falling for the eighth consecutive year. And the economy has been growing for many years at a rate below the world average.
The “2020s imbalance” scenario assumes an increase in conflicts and a decrease in the political stability of the regime. This can happen if stable stagnation cracks. For example, due to accumulated effects such as the departure of specialists abroad, the effect of sanctions, a decrease in income from the export of hydrocarbons, and an aging population.
The authors of the report conclude that the volatility of oil prices, as well as the lack of real reforms, could lead to a protracted crisis in the 2030s. It will be characterized by a significant drop in GDP and social upheaval.
In a new episode of the podcast “What Happened”, we talk with one of the authors of the report “Stagnation-2” Oleg Itskhoki – he is a professor of economics at the University of California.