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Russia sees cautious recovery at St Petersburg Economic Forum

Russia has tamed the Covid-19 pandemic and intends to move forward, or even play a leading role in the global recovery. This is the message that was repeated on the occasion of the Saint Petersburg Economic Forum (SPIEF), from Wednesday 2 to Saturday 5 June, the only holding of which, after the 2020 parenthesis, illustrated this declaration of intent.

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“Nothing that looks like a disaster has happened, argued Vladimir Putin during his concluding speech on Friday. It was possible, given the conditions, but it didn’t happen. “ In fact, the figures prove the Russian president right – if we omit, as he systematically does, those of mortality (465,000 additional deaths recorded between April 2020 and April 2021 compared to the mortality usually observed).

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The Russian economy, very briefly confined, contracted less than the European economies. After declining 3.1% in 2020, gross domestic product (GDP) should return to its pre-crisis level by the end of 2021, according to the Bloomberg agency. The Managing Director of the International Monetary Fund, Kristalina Georgieva, even said her « admiration » for Russian financial management during the pandemic.

Main problem addressed by the Russian officials present: inflation. While it appears reasonable at first glance (5.5% in April), the indicator masks a difficult reality for households. First, the rise in prices is particularly marked in the food sector; then, it is superimposed on a continuous drop in income since 2013. In the name of the major macroeconomic balances, state support to businesses and households has remained weak, including during the crisis (around 4% of the GDP).

Modest presence of foreign investors

Rare display of differences within the government, we have seen the Minister of Finance, Anton Silouanov, warning his colleagues against the temptation to regulate prices in a too artificial way. In the winter of 2020, such attempts, driven by Mr. Putin, had ended in failure.

The other big lesson of the Forum was the modest presence of foreign investors. If part of this state of affairs has been attributed to travel restrictions, the finding existed long before the Covid-19. And it is similar with regard to the signing of contracts, in sharp decline. “SPIEF is no longer made to make new friends, but to count itself”, summed up a regular.

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