At the St. Petersburg International Economic Forum yesterday, they discussed the prospects of not only the Russian, but also the world economy, more precisely, global trends after the pandemic, to which Russia will have to adapt. Foreign experts called for preparing for new epidemics, but at the same time not counting on previous support measures – their governments will no longer be able to afford. At the same time, it was concluded that, in general, the role of states will only grow further – along with an increase in social spending and a reciprocal increase in debts and taxes.
When discussing global trends in the post-pandemic world, the main visionary experts at the forum were the former head of the Bank of Israel, the chairman of the board of JPMorgan Chase International, Jacob Frankel, professor of psychology at Harvard University, writer Stephen Pinker, and political scientist Farid Zakaria (author of Ten Lessons for the World After pandemic “). The session was moderated by German Gref, head of Sberbank.
Farid Zakaria warned that there can be no answer to a new pandemic (that it will happen, none of the experts expressed doubts) as to the current one: “We don’t have enough money, we cannot just take and close whole sectors of the economy and introduce a lockdown ”. At the same time, digitalization will allow it to remain active in many sectors, and it will be given an increasing role. “People will probably go to the office four days a week, not five as they are now, and travel less,” suggested Farid Zakaria.
Jacob Fraenkel noted that expectations about the state are now higher than it can actually give, and countries need to rethink social contracts, maintaining a balance in order not to destroy economic incentives, as might happen if taxes increase in response to an increase budget deficits.
Stephen Pinker suggested that globalization will turn out to be a more important force than local constraints, since many processes already “know no boundaries”. He noted that it is difficult to predict specific trends now – it is easy to outline how the situation should develop, but the result will depend, among other things, on the position of governments – whether it is an approach that “a pandemic is an emergency situation, we passed it and returned to the previous image life ”, or it will be“ a new way of life ”. In democratic countries, according to Stephen Pinker, the first approach is more likely to be implemented.
It was said at the session that states are likely to be more actively involved in the redistribution of income, despite the fact that now the authorities of the OECD countries are already distributing 20-30% of GDP. To this, Farid Zakaria noted that there is indeed an increased demand for the state to take a more active role in solving certain problems. At the same time, according to him, the effectiveness of the state’s response does not always correlate with its share in the economy – for example, Taiwan, Singapore and South Korea, where the state’s share is relatively small, had the best response to the pandemic.
Maksim Oreshkin, Assistant to the President of the Russian Federation for Economic Affairs, describing his vision of the global agenda, noted that in ten years everyone will be watching not the rates of central banks, but the deficits of governments – regulation will go into budgetary policy, since lending will not grow at the same pace. like now. German Gref noted to this that the level of spending has already risen sharply and may become unstable. Maxim Oreshkin, in response, suggested that the debt crisis could be avoided – the costs would be high, but lower than after the approval of costly packages to support the economy in the pandemic. In general, in the coming years, there will be a strong growth in the role of the state – “the left turn in economic policy is with us for a long time,” assured Maxim Oreshkin.
Economists, however, are already concerned about whether the world economy is threatened by stagflation – a simultaneous combination of stagnation and rising prices. The development of the situation depends on how stable the trend for increasing inflation will be, which sharply manifested itself this spring not only in Russia – in the euro area, we recall that the growth rate of consumer prices reached 2%, which was extremely difficult to imagine before the pandemic, in the USA it even jumped to 4.2%. Against the background of increased business activity, manufacturers are simultaneously increasing both prices and output.
However, the further development of the situation will depend not only on supply and demand, but primarily on inflationary expectations. “In Europe and Japan expectations are not moving, in the United States they have moved, but only minimally, in Turkey there is a giant surge, so everything depends on the independence of the Central Bank – in those countries where it is supported, expectations do not respond to a temporary surge,” said the rector of NES Ruben Enikolopov. In turn, Yevgeny Vinokurov, EDB Chief Economist, predicts that there will be several debt crises in middle-income countries on the horizon of 2023-2024. The growth of the FRS rate will shift to rates of developing countries, which will lead to a sharp increase in financial needs and pressure on budgets, then developed countries, which have already increased their debt to 120% of total GDP, may face debt problems, he warned.