MOSCOW, February 25. /TASS/. The spread of the new coronavirus around the world, in particular the recent outbreak in Italy, could result in currency instability and a negative scenario for the ruble exchange rate, chief economist at Alfa Bank Natalia Orlova told TASS.
"In general, the spread of the epidemic outside of China speaks of a more negative scenario for the ruble. Whether the effect will be negative enough to financially affect inflation is not yet obvious," she said.
According to Orlova, the outbreak of the virus in Europe will not affect trade with the EU, since the main export item with Europe is raw materials. Also, this will have little effect on the volume of imports from Europe.
"The European rates dipped by more than 3% in one day, the dollar has already risen in price, and in addition, the price of gold has risen by 10% since the beginning of the year. All this can lead to a large-scale economic crisis around the world if the situation is not localized," President of All-Russian Non-Governmental Organization of Small and Medium Business Opora Russia Alexander Kalinin told TASS.
According to him, if the situation does not stabilize with the quarantine imposed in a number of provinces of China, this could lead to a further drop in exchange rates.
Oil prices and exchange rates
Orlova noted that the coronavirus influence is possible through two channels: oil prices and the exchange rate. At the same time, if the possible risk of lowering oil prices is "partially stopped by the budget rule," "strengthening of the dollar, by and large, would not be stopped, because it is a matter of capital movement."
Kalinin also emphasized that the value of oil and metal exported by Russia has already fallen on exchanges. "Only on commodities, our losses can be around a billion dollars this year, if the prices of goods do not recover. And if they fall some more, then there will be additional losses," the expert added.
"From the point of view of the Russian economy, this means lower oil prices - $50-60 per barrel against $60-70, and lower revenues from exports of services (transit flow of passengers from Southeast Asia to Europe)," Director of the analytical department at Region Group of Companies Valery Vaysberg said.
In addition, the analyst believes that a decrease in energy exports both in nominal and physical terms can be expected, both to Europe and to the countries of Southeast Asia. According to him, this will lead to a decline in the positive trade balance and, accordingly, to a lower ruble exchange rate.
"If the outbreaks in Italy and South Korea are not suppressed in the near future, we can see the dollar significantly above 66 rubles," Vaysberg noted.
Impact on Russia's economy
According to Alfa Bank’s chief economist, if the coronavirus epidemic does not end before the end of 2020, the negative contribution to the Russian economy can be up to 0.3 percentage points per year.
Associate Professor at the HSE Department of World Economy and World Politics Petr Mozias believes that the impact on the Russian economy can be complex, as Russian-Chinese trade turnover reaches great values. In addition, the negative impact may be seen primarily on the Russian companies that are engaged in logistics and sales of Chinese goods.
Since exports from Russia mainly include raw materials, a slowdown in the Chinese economy will help reduce demand from Russia, the expert noted.
If the situation continues to worsen, Russian enterprises and Opora Russia will appeal to the Russian government for support due to a decline in trade with China, Kalinin told TASS. In particular, support is needed for those directly affected by the drop in the value of goods exported to China and the decrease in turnover due to the suspension of activities of Chinese enterprises, he said.
"Chinese entrepreneurs are seeking government support. First of all, this situation affected the hotel business, airlines, car dealers, restaurants, retail property owners. They all turn to the Chinese government for help," Kalinin said. At the same time, business associations in China note that since yesterday the danger level has been lowered in seven provinces, and the situation has begun to improve, he added.
One of the main recent topics was the outbreak of coronavirus in Italy - the number of confirmed cases in the country reached 229, six people died. Giuseppe Conte, Prime Minister of Italy, warned of a possible very strong effect of the virus on the Italian economy.
The Chinese authorities registered an outbreak of the novel coronavirus 2019-nCoV in the city of Wuhan at the end of December 2019. The World Health Organization has declared the coronavirus outbreak a public health emergency of international concern. Coronavirus cases were confirmed in more than 30 other countries and territories, including in Russia. According to the latest data, almost 2,600 people have died in China, around 25,000 have recovered, while the overall number of people who contracted the novel coronavirus has exceeded 77,000.