COVID-19 and the Russian economy

Abstract

COVID-19 can be rightfully considered the most economically damaging worldwide pandemic. In many aspects, the global crisis related to the coronavirus spread is unique, as this destructive recession has no economic precursors and goes mostly down noneconomic lines. The global economy has already lost almost 90 trillion dollars because of the pandemic. Quarantine policies introduced in Russia due to the COVID-19 outbreak helped to reduce infection and mortality rates by implementing emergency mobilization measures in the healthcare system that can be compared to wartime situation and led to serious economic issues. Consumer-focused sectors of the Russian economy were the ones most affected by the downturn, with the volume of paid services plummeting by almost 40%, while retail trade turnover decreased by 22.6% and 18.6% in April and May 2020 respectively. Nevertheless, the Russian economy survived the downturn better than other large countries where more severe quarantine restrictions had been imposed. According to the Federal State Statistics Service, the Russian GNP fell by 8.0% in the second quarter of2020, which was a lesser decline than predicted by the Ministry of Economic Development. In general, the recovery of the Russian economy will be smart (based on digital technologies), inclusive (focused on low-income households) and sustainable (facilitating clean energy investments and reducing environmental damage). It is also worth noting that monetary and fiscal policies themselves cannot provide sustainable growth and financial stability. A reasonable balance between monetary, budget and prudential policies, accompanied by adequate structural reforms, is the only way to ensure economic recovery and national welfare.