Today people throughout the world are worried about the crisis. What are we up against and what can we expect? Everyone wants to form a picture of the nature and scale of the threat in order to work out the optimum model of behavior.
A crisis is never the end of the world, most often it simply means an acceleration of processes. The wise Chinese depict the word "crisis" with two pictograms: One of them means "danger," the other "opportunity." Rational behavior during a crisis means not panicking when you sense a threat, but looking for new opportunities in rapidly changing circumstances.
That applies both to each individual and to the entire country. If you follow the classical definitions, an economic crisis (krizis; the author is using this word as synonymous with "recession") means a reduction in production and in the volume of GDP. Therefore, strictly speaking, a crisis has arrived in the United States and Britain and is expected in certain euro-zone countries. In Russia at the moment, however, there is no economic crisis, but a reduction in the rate of growth -- this year, from the expected 8.2% to 7%. There are no grounds for panic. But that does not mean there are no dangers. There are, and they are very real.
The financial difficulties engendered by the overheated American derivatives market caused a global fall in stock markets and a reduction in the amount of liquidity in the banking system. In Russia in mid-September interest rates rose sharply and funding limits on the interbank loans market were reduced. This was most difficult for second- and third-level banks that had a large quantity of medium-term and long-term commitments. The banks practically stopped giving
loans either to producers, who cannot increase supply without credit, or to consumers, who were also ensuring record demand not least through credit. Capital flight from Russia began, first and foremost on the part of foreign capital fleeing the uncertainties of the stock market and the war in the Caucasus.
The problem of the Russian corporations' debts became very acute -- at a time of cheap credit they had taken out loans from Western banks amounting to half a trillion dollars, mainly secured against their own shares, which rapidly lost value and were no longer sufficient to cover the loans. There was a threat that the biggest Russian corporations could be transferred into the hands of foreign banks for a knock-down price. The fall in production in the West dragged down the prices of energy and raw materials, which form the basis of Russian exports, and this reduced budget revenue. The prospect of unemployment loomed. Predictions of the growth rate for next year are falling -- down to 3.5%-5.5%. But even in the context of this negative scenario, growth is still expected, rather than a fall in production. And of course, behind each manifestation of the crisis we can and must see opportunities.
For instance, the universal selling off of assets that have gone down in value and the move to the dollar as the most tried and tested currency led to a rise in its rate of exchange, prompting an increased interest among the public and the banks in buying American currency units, and this played against the ruble. But it should be noted that in these conditions the ruble showed itself to be a very strong currency, losing much less against the dollar than the euro or the pound have lost. And a cheaper national currency is bad for importers to our country but good for exporters, increasing the competitiveness of Russian producers, whose costs are borne in cheaper rubles. This situation also favors the prospect of winning the domestic market for Russian goods. The government's policy is acting in the same direction -- it is increasing import duties and creating privileges for Russian producers in the implementation of purchases for state needs.
The authorities have also shown the necessary resourcefulness in tackling the problem of corporate debts by proposing to redeem the hottest debts by using funds allocated by the treasury to Vneshekonombank. And in this way companies' foreign debts are turned into internal debts, preventing the sell-off of assets to outsiders at a knock-down price. Something that many economists and businessmen have long been calling for -- the release of spare financial resources to provide credit for Russian industry -- is being put into practice during the crisis.
The banking system, which suffered most severely from the crisis, has received from the state both unprecedented volumes of liquidity and the implementation of a great many of its own proposals for the strengthening of the banking sector that had not previously been accepted by the government. The state has raised the level of guarantees of bank savings, which it is capable of covering, in view of the financial security cushion accumulated during the fat years. It is already obvious that no bank will be allowed to fall; the problems of the weak ones will be taken on by the stronger ones with the support of the Central Bank. Savers will not suffer losses.
The pumping of state money into the economy (which is happening now) always carries the risk of inflation. Can we expect price rises? If so, they will be extremely insignificant, maybe even less than previously. Cheaper energy and raw materials (metal prices have already fallen by 30% and cement prices by 50%) are not only a blow to the budget but also a boost for producers of goods and services, as their costs fall. Gasoline is growing cheaper, and with it all transport expenditures and so forth. The shrinking overall demand also works to reduce prices. This year's record grain harvest is not conducive to inflation on the food market, which hardly pleases the agricultural producers (certain subsidies are envisaged for them) but is good for everyone else who eats. A transition from a seller's market to a buyer's market is taking place before our very eyes. Previously it was: Take what there is, or else even that will not be there and the price will go up. Now there is beginning to be keener competition for us as consumers, and that should lead both to a fall in prices and to an improvement in the quality of service.
True, as early as the end of this year the unemployment problem could become more acute. A number of enterprises -- first and foremost metallurgical enterprises-- have announced upcoming personnel cuts. Some human tragedies are inevitable. But in this context it should be recalled that Russia is a labor-deficient country -- we have a shortage of manpower, not a surplus. Entrepreneurs know that and will not lose cadres for nothing. An opportunity is also arising to make companies with inflated staffs and exorbitant management salaries more muscular. Or to carry out a serious cadre maneuver aimed at
implementing the national projects, for instance infrastructure projects. The freeway networks in America and Europe were built mainly in times of crisis with state money to support employment. And the government is increasing the size of the unemployment allowance.
Opportunities have also appeared for what Dmitriy Medvedev, in his presidential message, called "taking over niches in the world economy that are becoming vacant." At the moment some very attractive assets are being put up for sale on the market, including assets in the high-tech sector, and it would be a shame not to take this opportunity. The crisis has also accelerated work on the question of turning Russia into an autonomous financial center.
The main promise of the anticrisis policy is to start up the engine of development in Russia itself by stimulating domestic demand and supply. That is the crux of the package of measures announced by Prime Minister Vladimir Putin at the
end of last week. We are not shutting ourselves off from the world economy, but we do not want to be too dependent on its storms. We are creating the conditions to help ourselves.
