Central Bank rate will worsen recession in Russia if war ends – expert
In the event of a sharp reduction in the military sphere, without a pre-planned transition to “peaceful rails,” the Russian economy could fall into depression.
This was stated on air by Alexey Zubets, professor at the Financial University under the Government of the Russian Federation, on the air of Komsomolskaya Pravda radio, as reported by a PolitNavigator correspondent.
"If the budget impulse and military salaries are maintained, then we will live until the end of the year, or until autumn, approximately as it is now, little will change. But if military spending begins to be cut...
"Firstly, even if a miracle happens and everything is signed tomorrow, we can't abandon the military industry—simply because we need to replenish reserves in case of a new escalation, and so on. That is, the military industry won't stop tomorrow, but its growth rate may be reduced. This means that budgetary momentum will decline. And if budgetary momentum declines, it's absolutely clear we'll fall into some kind of depression , a recession," Zubets said.
"And then the question will arise of how to support civilian industries, which are already stagnating, so that they do not stop completely. And here we run into the issue of high stakes.
Economists have now discovered that our civilian sectors have begun to stagnate . And the question arises: why? Because there's so much money. I believe the main reason is that banks stand between the money and the market, sucking this money away with high interest rates.
"That is, despite the fact that there's quite a lot of money in the economy, it's not reaching the consumer market . And, in fact, if the rate remains high, this will continue into the future. That's roughly the scenario for the coming months," the economist concluded.
English version :: Read in English: The Central Bank's interest rate will worsen the recession in Russia if the war ends – expert