27 April 2020
Pandemic may slash Russia's GDP by 8%, says Audit Chamber chief Kudrin

Pandemic may slash Russia's GDP by 8%, says Audit Chamber chief Kudrin

Mikhail Tereshchenko / TASS

Russia's GDP may go down by as much as 6 to 8% as a result of the COVID-19 pandemic, Russian Audit Chamber chief Alexei Kudrin said in an interview with state-run television channel Rossiya 1. Some industries may take more than a year to recover due to the complete loss of demand, according to the official.

Kudrin noted that the main challenge for Russian economy will be surviving the peak of the crisis, which he believes will be deeper than a typical economic downturn. According to Kudrin, Russia's economic recovery will begin despite the drop in oil prices.

The economist has advised Russian President Vladimir Putin to actively draw on the National Wealth Fund (NWF) at the peak of the crisis - Kudrin believes that "it won't hurt" if the authorities spend more than half of the fund's 8 trillion roubles ($108 billion) in 2020.

Unemployment in Russia could reach six to nine million people, or 10% of the economically active population, the official estimated. Kudrin also expects to see multiple bankruptcies in industries most affected by the epidemic.

The same Rossiya 1 report quoted presidential aide Maxim Oreshkin as saying that this is the is the biggest global economic crisis since World War II. Oreshkin added that Russia has the resources to solve some of the problems triggered by the downturn.

Sberbank CEO Herman Gref weighed in by saying that the crisis will have a delayed impact on the banking sector - banks will take a hit when people and businesses go bankrupt and default on their debts. He added that deferrals on loan payments will cost Russian banks 160 billion roubles ($2.15 billion). Gref concluded that Russian financial institutions may require assistance from the state by the end of the year.

Igor Bukharov, President of the Russian Federation of Restaurateurs and Hoteliers, and Vagit Alekperov, co-owner of Lukoil, both told Rossiya 1 that the crisis was "unique" for their industries. Bukharov noted that this was the fifth economic crisis of his career, but the first entailing a complete industrywide shutdown. Alekperov added that the oil industry is also in uncharted waters, as consumer demand for oil is now at an all-time low.