MOSCOW, August 28. /TASS/. Russia’s Economic Development Ministry has warned about recession risks in the country in 2021 in its revised macroeconomic forecast if no measures are taken to restrict consumer lending growth rates. Particularly, the ministry projects that if the situation in the sector of consumer lending deteriorates the expenditures of households on final consumption may decrease by 4.5% per year in real terms. Meanwhile, the economy will dive into recession in 2021, while GDP will shrink by 0.6%.
Experts polled by TASS were split in opinions whether further growth of consumer lending may trigger recession.
Raiffeisen Bank’s macroanalyst Stanislav Murashov does not expect recession driven by domestic factors thanks to the growth of investments in the Russian economy onwards. Priming of economy due to National Projects will start as early as the end of 2019 or the beginning of 2020, he said, adding that the factor of serious international economic risks is the only one that might trigger recession in 2021.
"For us consumer lending is not the nuclear of stress scenario, but one of its possible parts. So far external environment seems a substantially larger threat than domestic," Dmitry Kulikov, an expert of the sovereign ratings and forecasting group at the Analytical Credit Rating Agency (ACRA), agreed.
Meanwhile, with the current balance of income and expenditure the decline in lending, if it occurs, may constrain consumer expenditures by around 5% at most, which all else being equal translates into slightly more than 2% of GDP, the expert said. "We suggest though that such a halt in lending will not be unexpected - a relatively strong external shock will be required, not simply the cyclical logic of events. That scenario requires that banks should respond to the external shock environment, not only the ongoing paying capacity of borrowers," Kulikov explained.
Egor Susin from Gazprombank believes that the slowdown of lending growth rates will negatively affect Russia’s GDP growth. "The growth rates of consumer lending have been on the rise over the past two years, whereas now the debt burden levels are already higher than the height of 2013. That lending growth provided certain support to consumer activity, obviously, the slowdown of lending growth rates will negatively affect the economic growth dynamics," he said, adding that such a scenario may be expected "even earlier than 2021."
Director of the Center for Structural Research at RANEPA, former Deputy Economic Development Minister Alexei Vedev shares the ministry’s view. "Consumer lending growth is one of the key risks. In 2021, the recession risk is even higher due to the fact that the Economic Development Ministry and the government project growth above 3%, though there are no such prospects so far," he noted.