On the strategy of the economic security of Russia for the period to 2030

Not just respond to threats, but anticipate them in advance and apply preventive protection measures

In the current economic conditions of the ever-changing business environment, the questions of prompt response come to the fore. However, long-term sustained development and an advantage in the world market are consolidated by those who set a competent long-term strategy. One of the steps aimed at achieving of stable rates of growth of the national economy for the long run became the Strategy of Russia's Economic Security for the Period to 2030 approved by the Russian President.

The main threats. The main focus of the document approved by Vladimir Putin in May this year is on the challenges and threats to the country's economic security, as well as on the goals and directions of the state policy in the sphere of ensuring economic security. The Strategy assigns to challenges and threats of the economic security: the aiming of developed countries to use their advantages in the level of development of the economy and high technologies as an instrument of global competition; strengthening of structural imbalances in the world economy and financial system; use of discriminatory measures regarding to key sectors of the economy of the Russian Federation; change of the structure of global demand for energy; exhaustion of raw-materials export model of the economic development; insufficient volume of investment in the real sector of the economy; limitation of the scope of Russian non-resource exports; insufficiently effective public administration; unevenness of spatial development of the Russian Federation.

On guard of the economic security. The main objectives and directions of the state policy in the sphere of ensuring economic security in accordance with the approved document are: strengthening the economic sovereignty of the Russian Federation; increasing the economy's resilience to the impact of external and internal challenges and threats; maintenance of scientific and technical potential of economic development at the world level and increase of its competitiveness; development of public administration, forecasting and strategic planning in the economic sphere; ensuring sustainable growth of the real sector of the economy; creation of economic conditions for development and introduction of modern technologies, stimulation of innovative development; sustainable development of the national financial system; balanced spatial and regional development of the Russian Federation; development of the human potential.

Risks under control. The document also states about the establishment of a risk management system, the main tasks of which are: identification and assessment of existing and potential challenges and threats to economic security; assessment of the resources necessary and sufficient to prevent challenges and threats to economic security; planning of measures to implement the state policy in the field of economic security development, control of the implementation and evaluation of the effectiveness of measures for counteraction of economic sanctions.

Step-by-step development. Implementation of the Strategy is planned in two stages. The first one will last until the end of 2019 and will involve the development and implementation of organizational, regulatory and methodological measures to ensure economic security, improve monitoring mechanisms and evaluation of its standing. The second stage, which will take the period until 2030, will be connected with the implementation of measures for neutralization of challenges and threats to economic security. Thus, the Strategy, being from the moment of its approval as the basis for the formation and implementation of the state policy in the sphere of economic security, should ensure the economic sovereignty of the RF and the stability of the national economy to external and internal challenges and threats, as well as the strengthening of socio-political stability, dynamic social and economic development, raising of the level and improving of the quality of life of the population.

Remembering the global economic threats, one should not also forget about the daily risks that accompany any entrepreneurial activity. According to experts, one of the most actual economic risks is the risk of business partnership, arising in the process of interaction of economic entities. An effective method of preventing risks of cooperation with unreliable business partners is comprehensive verification and constant monitoring of counterparties with the help of the Informational and analytical system Globas® of the Information agency «Credinform», containing the information on more than 24 million legal entities and individual entrepreneurs in Russia and the world, as well wide range of analytical tools that allow to solve effective and efficient the problem of minimizing the risks of business cooperation.

Domestic demand will promote the economy growth

Having showed the promising results in spring when industrial production index reached a maximum value of 5.6% since February 2012, in June-July the manufacturing industry in Russia demonstrated decrease. If in June the index of 3,5% was recorded, in July it was reduced to 1,1% (see Picture 1).

Increase of index can be explained with unusually cold weather in most of the European territory of the country that led to extension of the heating season and increase in demand on energy consumption. The fact of 1 working day more in May of 2017 against the previous year also played a role in positive cumulative effect. In June, the effect of the seasonal and calendar factors has stopped and it became obvious that the economy would not maintain high growth rates. The decline occurred in all sectors, however, it should be noted that among the sectors that have maintained a positive growth dynamics, there are not only raw materials, but also production of consumer goods.

Currently the industry could be supported not so much with export as with domestic demand. Under otherwise equal conditions the growing domestic consumption stimulates the increasing of goods output.

Strengthening of the ruble in the first half of 2017 led to import growth on 27% in US dollar terms. That was resulted in revival of retail business and manufacturing activity being a part of transnational brands – auto industry, electronics, etc.

However after a new wave of domestic currency weakening in August, the number of sectors has heavy expenses again: in Russia there are no analogues of needed equipment and materials or they just don’t meet current standards of quality and efficiency. Import substitution program launched by the Government is not able to reduce the lag in technology at short notice.

Conservative policy of the Central Bank aiming at struggle against price boost gives discrepant results – informing about successful achievement of the minimal inflation level ever, the Bank too carefully manages the reduction of rates thereby limiting the access to low-interest credit for business and citizens. Artificial limitation of money stock is resulted in nothing but economic stagnation.

Real income of population being decreased for three consecutive years takes a toll on domestic consumption: in 2014 they reduced on 0,7%; in 2015 – on 3,2%; in 2016 – on 5,9%; in January-July 2017 – on 1,4% (Income net of all obligatory payments and taxes adjusted for inflation).

Only export-oriented mineral companies, food industry enterprises, as well as companies rapidly crossed over to other suppliers, including from the RF, had the benefit.

Picture 1. Dynamics of industrial production in Russia, % to the relevant month of the previous year Picture 1. Dynamics of industrial production in Russia, % to the relevant month of the previous year

Table 1 contains information about industrial production by key industries in July 2017 (to July 2016) and January-July 2017 (to the same period of 2016).

Following the results of July 2017, the processing sector demonstrates increase in furniture production – on 11,2%, pharmaceuticals – on 10,1%, food products – on 8,4%, finished goods – on 8,1%, textile – on 7,7%. At the same time, output of other vehicles (buses, trains, etc.) decreased on 33,3%, cigarettes and tobacco – on 16,5%, printing products – on 9%.

Comparing the dynamics of industrial production index for January-July 2017, the auto industry appeared to be a leader with increase on 11,7% despite of decrease in shipments from factories on 0,5% (against July 2016). Car market will likely resume its growth bypassing monthly recession. Automobile construction is one of the key indicators of the development of consumer confidence and economic recovery because only under stability the population begins to purchase goods of deferred demand.

Table 1. Dynamics of industrial production in key industries of the Russian economy
INDUSTRY BY OKVED2 (the Russian Standard Industrial Classification of Economic Activities) INCREASE (DECREASE), July 2017 to July 2016, % INCREASE (DECREASE), January-July 2017 to January-July 2016, %
MINING 4,0 3,2
Other minerals mining 15,1 8,3
Provision of services related to mining 18,4 8,2
Mining of coal 7,1 4,1
Mining of metal ores 0,3 3,8
Mining of crude oil and natural gas 1,3 2,2
Manufacture of motor vehicles, trailers and semi-trailers -0,5 11,7
Manufacture of pharmaceutical products and medical devices 10,1 11,1
Manufacture of furniture 11,2 8,5
Manufacture of paper and paper products 5,0 6,9
Manufacture of textile products 7,7 6,5
Manufacture of chemicals and chemical products 0,9 6,5
Manufacture of electrical equipment 1,5 6,0
Manufacture of leather and leather products -1,2 5,2
Manufacture of clothes -3,1 5,0
Manufacture of food products 8,4 4,4
Manufacture of rubber and plastic products -1,1 4,2
Manufacture of wood and products of wood and cork 1,5 2,5
Manufacture of other non-metallic mineral products 2,0 2,3
Manufacture of machinery and equipment 0,4 1,8
Manufacture of coke and petroleum products 3,5 0,9
Manufacture of other finished goods 8,1 -1,0
Repair and maintenance of machinery and equipment -1,5 -1,8
Manufacture of beverages -8,3 -2,2
Manufacture of computers, electronic and optical products -6,6 -2,4
Manufacture of other motor-vehicles and equipment -33,3 -3,3
Manufacture of fabricated metal products 1,5 -3,4
Metal industry -4,5 -5,1
Printing and copying recorded media -9,0 -7,5
Manufacture of tobacco products -16,5 -21,4

Release of recent statistics on production in August and September will indicate whether the Russian production sector has gone into stagnation.

Continuing external sanctions pressure, transaction with OPEC binding Russia to reduce the exploitation rate for stabilization of the world market, increased volatility of the ruble also introduced additional risks into long-term business planning.

Despite the difficulties, the GDP growth in April-June 2017 in the annual comparison turned out to be the maximum for the last 19 quarters (from III quarter of 2012). Preliminary assessment of the GDP dynamics for II quarter was 2,5%. With the exception of seasonality, it can be stated that the Russian economy is growing for the fifth consecutive quarter, having passed the bottom of compression in early 2016.