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13 Apr, 2020 15:24

Economic guru Kudrin warns Russia’s unemployment could TREBLE, as Kremlin labels talk of return to 1990s chaos ‘hysterical’

Economic guru Kudrin warns Russia’s unemployment could TREBLE, as Kremlin labels talk of return to 1990s chaos ‘hysterical’

Perhaps nobody in Russia is more responsible for the country’s fiscal stability than Alexei Kudrin.

As Finance Minister, he paid off most of the national debt and built financial stabilization funds that have twice helped avoid financial ruin.

While Russia is better prepared for the inevitable Covid-19-driven economic recession than most of its G20 peers, Kudrin still believes the level of unemployment in Russia could treble before the end of the year, reaching eight million. While far from the 20 percent JP Morgan predicts for the United States, an 11 percent rate would put considerable pressure on the Russian social contract, especially given the low value of social welfare payments. It would also mark the highest annual figure of the Putin era, which has been associated with near-full employment.

This has led some to fear a return to the sort of social problems that plagued the 1990s. However, on Monday morning, Kremlin spokesman Dmitry Peskov dismissed these concerns as “hysterical.”

“There is no need to completely exaggerate, although it does require increased attention. [But] fear has big eyes,” he cautioned.

“According to forecasts during this crisis in Russia, the number of unemployed for some period will increase from 2.5 million to eight million, and it is possibly will happen until the end of this year," Kudrin, now Chairman of the National Accounts Chamber, told Moscow business daily RBK.

“Then there will be a restart [of the economy], a growth in demand and consumption, the number of unemployed will become smaller, and small as well as medium-sized businesses will resume their work.”

Kudrin observed that demand for certain services has completely disappeared due to the coronavirus lockdown: Restaurants, entertainment and sports in particular. “Companies do not know how long they will have to live like this; they will have to fire some people,” Kudrin added. He also noted how many employees of such companies are now on unpaid leave and who, if the situation continues, could be fired.

Meanwhile, the founder of recruitment giant superjob.ru, Alexei Zakharov, earlier delivered a doomsday scenario. He believes a repeat of 1991, when the Soviet collapse caused half of the country’s population to lose their jobs, could be on the cards. According to his forecast, if the self-isolation regime continues until the end of June, it will leave up to 25 million citizens out of work. “Airports, airlines, infrastructure industries, and transportation are already cutting staff. Truckers are stuck and heavy transportation by Russian Railways is declining,” Zakharov claimed, according to news site Lenta.

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At the beginning of April, Kudrin told Putin that Russia’s GDP could fall by eight percent. He insists the 1.4 trillion rubles ($19 billion, or about 1.3 percent of nominal GDP) that has been put aside to fight the crisis is insufficient. “The total support package should be at least seven percent of GDP,” he advised.

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