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Deflationary Spiral Of Russian Economy
March 30, 2016 00:50


The share of Russians who consider it necessary to give up large purchases increased from 63 to 72 percent from the beginning of the year to February. This is evidenced by the results of the opinion poll of the All-Russian Public Opinion Research Centre published on the website of the organization.

87 percent of respondents considered the current situation unsuitable for lending, as compared to 81 percent in December of last year. 43 percent of the poll participants recommended to withdraw money from banks (versus 40 percent in December). “For the first time in a long observation period all the indicators that signal the growth factor deteriorated at once, John Maynard Keynes called this factor “liquidity preference” - the leading expert of Opinion Research Centre Oleg Chernozub notes.

According to him, the growth of this factor shows that the economy is beginning to form deflationary risks. The sociologist believes that the Russian economy may be caught in a “deflationary spiral”: the population is trying not to spend money in fear of losing their jobs, then their turnover in the economy is reduced; enterprises cannot sell their products and have to reduce production, which entails dismissals; as a result, the population is convinced that their fears are true and continue to save.

The poll was conducted on February 20-21 among 1.6 thousand people in 130 settlements of Russia. According to the Federal Statistics Service, consumer prices rose by 0.6 percent in February and by 1.6 percent since the beginning of the year. Inflation in annual terms reached 8.1 percent in last month. Let’s compare, in February 2015 consumer prices rose by 2.2 percent and by 6.2 percent since the beginning of the year.


Author: Anna Dorozhkina


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