The crisis close?
According to Sergey Pukhov from the “center of Development”, the reason for the decline in steel imports fall in consumer and investment demand. “Import is usually an indicator of the crisis as before the crisis, imports fall, indicating weak demand. Before the last crisis in Russia, he, too, began to fall. Now we are seeing a decline in domestic and investment demand. It is possible that after some time the consumption of domestic goods will also start to fall as incomes fall. All of this can get GDP into negative territory,” — said Pukhov correspondent Forbes.
Import really quite well correlated with the mood of the citizens and business, and with the amount of investment in the economy, confirms the chief economist at Nordea Bank Denis Davydov. Lately the mood of consumers and businesses deteriorated. So, the Russians were more afraid of the downturn in the economy and the business confidence index declined in the third quarter compared with the previous quarter by 1 percentage point to -3%. “Investments were forced to “shrink” in the last two quarters on the background of the sanctions rhetoric and risks of devaluation of the ruble. All this led to the decline in imports,” explains Davydov.
Imports in the third quarter showed weaker dynamics than could be expected in the traditional seasonality, agrees chief economist of the Russian direct investment Fund Dmitry Polevoy. However, speaking about the reasons, in his opinion, it is worth noting the impact of a weaker ruble on the conduct of the business of importers and retailers that planned purchases for the second half. When the weak know they could be delayed in the hope of a subsequent recovery in the Russian currency.
If this Field does not see the decline in consumer demand. “Despite the official data of Rosstat about stagnant consumer incomes, the demand in the third quarter continued to grow at a good pace against the background of low unemployment, rising real wages and the volume of lending. Industry dynamics also did not indicate any dramatic change in the situation, on the contrary, the latest PMIS pointed to the improvement activity, including due to the growth in export orders,” explains the economist.
No need to panic
To estimate the reduction in imports, even such large, as a signal of imminent crisis at the current stage it is not necessary, according to respondents Forbes economists. Constant warming of the sanctions rhetoric tends to slow down the economy, but this is a temporary phenomenon, and on the decline too early.
“Business has frozen in anticipation, and that affects performance. But as soon as the situation becomes clearer, the pent-up demand will be implemented,” suggests Davydov.
The reaction of imports on weak ruble was expected and appropriate, considers Dmitry Field. Now, if it was not — it would cause concern. “Import is just playing the role of automatic stabilizer for the current account and the entire balance of payments”, — says the expert.
According to him, the ruble recently partially stabilized compared to the local minima, and it has the potential for further strengthening. “So that domestic demand in the fourth quarter will continue to grow, will grow, and imports. But in the future dynamics of imports should stabilize, following the directions of domestic demand, given that the main period of recovery after the decline occurred in 2017,” predicts Field.