Financial Markets: Increasing Complexity, Maintaining Stability

3–5 July 2019, ST. PETERSBURG

    Central Bank Governor Elvira Nabiullina believes that over the next five years the global economy will see a slow recovery, while central banks will tighten their policies. The Russian economy has entered a growth phase, she said.

    Speaking at the International Financial Congress in St. Petersburg, Nabiullina presented her vision of the main trends in the global economy in the coming years, a RBC correspondent reports. She believes central banks will tighten their policies and the global economy will take a path of slow recovery.

    Nabiullina also said that the Russian economy is at the start of a new growth cycle. “Right now, our economy is at the start of a new cycle. The Russian economy has resumed positive growth trends, albeit small ones for now. This year we expect growth of 1.3–1.8 percent”, she said.

    Nabiullina said the digital revolution is a source of social risks for the Russian economy. “The digital revolution and new wave of workplace automation that is altering the traditional profile of the labour market in a number of professions and sectors pose significant social risks”, she said. The response to this situation has been increased populism in politics, which itself poses new economic risks and contributes to continued volatility on financial markets.

    President Vladimir Putin previously announced that the Russian economy had entered into a growth cycle. At the start of his call-in show on June 15, the president said that the economic recession was over and noted that economic growth had begun. At the same time, Putin admitted that Russia had experienced a very serious economic decline and that was why Russians were still having a difficult time feeling the growth in the economy. “Is the economic crisis over? I'd like to respond positively, of course, and very much want to send a positive signal to the public. But at the same time you’re always thinking: what if something happens suddenly and a glitch occurs somewhere. But, of course, we must proceed from objective data when making conclusions of this kind. So what does the objective data say? It says the recession in the Russian economy has been overcome and we have entered into a period of growth”, Putin said.

    The Bank for International Settlements (BIS), also known as the “Central Bank of Central Banks”, said in its annual review at the end of June that the global economy is successfully recovering and its short-term prospects are the best they have been for a long time. Global GDP will increase by 3.5% in 2017, which is consistent with the long-term average indicators, although less than the annual growth rate of 4% seen during the ‘golden decade’ prior to the 2008 crisis, according to BIS experts. Unemployment has fallen to the pre-crisis level, inflation rates are close to central banks’ targets, and economic forecasts no longer contain risks of deflation.

    The International Financial Congress is taking place in St. Petersburg from July 12–14, 2017 under the theme ‘Finance for Development’. Representatives of the Central Bank, bankers as well as the current and former heads of central banks of several countries will discuss the development of the financial sector for the next five years at the Forum.