Economic Consequences of the Coronavirus Epidemic in Russia Amid the World Experience

Girsh I. Khanin
Doctor of Science in Economics, Professor, The Siberian Institute of Management – a branch of the Russian Presidential Academy of National Economy and Public Administration, Novosibirsk, Russian Federation, This email address is being protected from spambots. You need JavaScript enabled to view it.

Dmitry A. Fomin
Candidate Science in Economics, Senior Researcher, Institute of Economics and Industrial Engineering, Siberian Branch of the Russian Academy of Sciences, Novosibirsk, Russian Federation, This email address is being protected from spambots. You need JavaScript enabled to view it.

Journal of Economic Regulation, 2020, Vol. 11 (no. 2),

p. 6-18
DOI: 10.17835/2078-5429.2020.11.2.006-018

The short and long-term consequences of the coronavirus epidemic on the state of the Russia’s economy are considered. They are correlated with its influence on the economy of Western countries, primarily the United States. Thus, both similar and distinctive features are identified, determined by the aspects of their past development and the economic policy nature. The features of the Russia’s economy over the past 30 years include a huge reduction in GDP, a low percent of gross fixed capital formation, the dependence of the economy on oil prices, hypertrophy of the consumer services sector, the weakness of the real economy, and the degradation of human capital. Some weaknesses of the Russia’s economy have analogues in the US economy. The measures of the Russian state to alleviate the economy and the lives of citizens during the epidemic are analyzed. It is shown that they are relatively much smaller than in developed Western countries and least of all relate to the standard of living of the population, which will adversely affect the development of the economy in 2020 and the timing of its exit from the crisis. At the same time, the way out of the crisis in Western countries, especially the United States, is hindered by the huge size of their debts. The course of the economic crisis associated with the epidemic in Russia is analyzed. Attention is drawn to the fact that already in the 1st quarter there was a drop in GDP. Based on data on the economy development in April and understanding the nature of the Russia’s economy, society, measures to combat the crisis, the experience of other countries, GDP is predicted to drop in the 2nd quarter by 29% and by the end of the year by 13%. This will be the largest drop in the world. The measures to overcome the crisis are proposed. They aim to take advantage of the crisis to ensure sustainable and rapid economic development after the end of the epidemic. This refers to a drastic increase in the share of fixed capital formation in GDP due to incomes taxation of the most-affluent section of the society, tax exemptions and subsidies to the real economy.

Download full text in pdf

Keywords: Economic consequences of the coronavirus epidemic for the Russian Federation; Russia’s economy; Forecasting the development of the Russia’s economy in 2020; Measures to overcome the consequences of the crisis of the Russia’s economy caused by the coronavirus epidemic

References:

Business Activity Situation for the First Quarter of 2020. (https://www.economy.gov.ru/material/file/ac6e8a2c77de9564b4b82c269b67213f/200429.pdf – Access Date: 21.05.2020).
Meeting on Implementing the Measures on Supporting the Economy and Social Sphere.(https://www.economy.gov.ru/material/news/ekonomika_bez_virusa/soveshchanie_po_voprosam_realizacii_mer_podderzhki_ekonomiki_i_socialnoy_sfery.html – Access Date: 21.05.2020).
Plan to Overcome the Economic Impacts of a New Coronavirus Infection prepared by the Government of the Russian Federation. (https://www.economy.gov.ru/material/dokumenty/plan_preodoleniya_ekonomicheskih_posledstviy_novoy_koronavirusnoy_infekcii.html – Access Date: 21.05.2020).
Press Release by RZD JSC as of April 1, 2020. (https://old-press.rzd.ru/news/public/ru?STRUCTURE_ID=654&layer_id=4069&refererLayerId=3307&id=95662 – Access Date: 21.05.2020).
The Unified Power System of Russia: Intermediate Results (Real-Time Data). (2020) March. (https://www.so-cdu.ru/fileadmin/files/company/reports/ups-review/2020/ups_review_0320-1.pdf – Access Date: 21.05.2020).
Economics of the capitalist countries. Economic and statistical manual (1959). Moscow. Economist (2020).April 4–10.
Fomin, D. A., & Khanin, G. I. (2017). The Dynamics of the Fixed Capital of the Russian Economy in the Post-Soviet Period (1992–2015). Problemy Prognozirovaniya, (4), 21–33.
Hanin, G. I., Fomin, D. A. (2011) Money for modernization; how many do you need and where to get it? Svobodnaya mysl’ [Free Thought], (1).
Khanin, G. I. (2018). An alternative assessment of the Altman model for the Gazprom group for 2016: facts and hypotheses. Terra economicus, 18 (2).
Khanin, G. I. (2019). Russian industrial companies and creditors held captive by crafty numbers: facts and hypotheses. Economic regulation issues, (1).
Khanin, G. I. (2020). Will Andrei Belousov save the Russian economy? Sem’ Iskusstv [Seven Arts], May.
Khanin, G. I., & Fomin, D. A. (2014). On Alternative Assessments of Economic Development of the Former USSR Republics, Countries of the Eastern Europe and China. Voprosy statistiki (7), 64–79.
Khanin, G. I., Fomin, D. A. (2017). Post-Soviet Society and Russian Macroeconomic Statistics. Mir Rossii [World of Russia], (2).
Khanin, G. I., Fomin, D. A. (2019). Institutional investment and financial prerequisites for the revival of Russian industry. Journal of Institutional Studies, (1).
Khazin, M. (2019). Memories of the future. Moscow.
World Economic Outlook, April (2020). The Great Lockdown. (https://www.imf.org/en/Publications/WEO/Issues/2020/04/14/weo-april-2020).

Publisher: Ltd. "Humanitarian perspectives"
Founder: Ltd. "Humanitarian perspectives"
Online ISSN: 2412-6047
ISSN: 2078-5429