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The Ministry of Economic Development announced the forecast for inflation until 2024

The Ministry of Economic Development lowered the forecast for inflation in the Russian Federation for 2020 to 3% from 3.8%, keeping the forecast for 2021-2024 at 4%, the Minister for Economic Development of the Russian Federation Maxim Oreshkin told reporters, presenting an updated forecast for the Ministry for 2020-2024 and Updated forecast for 2019. “Inflation in H1 2020 will fall below 3%, and by the end of the year it will be 3%”, he said.

Mr Oreshkin noted that in the forecast for inflation of 3% in 2020, the Central Bank softens the DCT. The minister added that next year there will be some change in the structure of newly issued loans from consumer loans in favour of mortgage and corporate loans.

“Consumer lending has little to do with the basic rate of the Central Bank, it is more related to the willingness of banks to issue such loans and, of course, the availability of demand. The fact that we see a high proportion of current income that people who have taken these debts have to send to pay them off, this is a factor that will increase with each quarter and, in fact, seriously reduce the ability, on the one hand, people to take this kind of loans, on the other hand, the willingness of banks that will overestimate this whole situation, issue such loans”, - he explained in an interview to television channel “Russia 24”.

“The growth rate (consumer lending), which now is about 25% per year, is significant, several times higher than the growth rate of nominal incomes of the population, therefore it is unstable, it cannot be kept constant. There is only one question - when will such a fast growth rate end? The central bank is now responding to the situation in this market: it tightens regulation; the next tightening measures are introduced from October 1. This factor, superimposed on the general situation, can lead to the fact that the growth rate here has seriously slowed down. “We expect growth of about 4% in the consumer loan portfolio next year”, the minister added. According to him, such a slowdown in consumer lending will contribute to a large weakness in consumer demand (according to the forecast of the Ministry of Economic Development, retail turnover in 2020 will grow by 0.6%) and reduce inflationary dynamics.

“If inflation decreases, the Central Bank, as he himself said, will lower the level of interest rates, and since consumer lending will not react seriously to the level of base rates, the main effect will be realized in mortgage and corporate lending”, said Mr Oreshkin.

 

Source: www.ria.ru  

News

In September 2020, the monthly increase in consumer prices (as estimated seasonally adjusted) decreased to 0.25% compared to 0.38% in August, according to the next release of the information and analytical commentary “Dynamics of consumer prices”.

Consumer demand in the first seven months of 2020 in Russia decreased due to the coronavirus pandemic by an average of 6.7% relative to the result of January-July 2019.
Net capital outflow in January-August 2020 increased 1.7 times compared to the data for the same period last year – from $20 billion to $34.8 billion.
The international rating agency S&P has approved a long-term rating of Russia for liabilities in foreign currency at BBB- with a stable outlook.
The unemployment rate in Russian regions at the end of Q2 2020 increased by an average of 30% compared to the same period last year, writes Kommersant, citing Rosstat.
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