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No economic crisis yet

MOSCOW. (RIA Novosti economic commentator Mikhail Khmelev) - Russia's financial system has generally stood up well to negative global impacts caused by a crisis of confidence on the American mortgage market. Russia remains a safe haven for foreign investors, experts say in unison.

Even the Russian stock market, which is most integrated into the world system, has suffered little, compared with jittery portfolio investors around the world. Some risks, however, can still catch up with Russia. One should expect serious upheavals for the Russian financial system in 2009-2011.

Financial market players in Russia can breathe easily - global repercussions just skimmed Russia. The most serious damage has been done to the stock market, which lost $7 billion in foreign investments in one month. Estimates put it at between 10% and 30% of the speculative capital that entered Russia since the beginning of 2007. However, trust in Russian securities has survived. The key RTS index never dropped by more than 10% to 12% since the beginning of the year. Compare it with a 30% fall in May 2006, when a shaky world market depressed Russian stock sentiment.

Investors have not lost interest in the Russian economy. "Russia is on the boil, and is getting not only money, but also direct investments," said Yevgeny Yasin, research director at the Higher School of Economics. "The country is having a streak of luck. Russian companies may be borrowing a good deal outside, but others are willing to lend. Russia is fashionable now and can absorb such money." He does not expect any setbacks, not in the short term at any rate.

Russia has a financial "safety cushion" - its stabilization fund. In September it reached 3.4 trillion rubles ($133 billion), or over 11% of GDP. The budget surplus, which is also growing fast (it was 71% of the year's target during the first six months), raises no fears either. The international rating agency Standard & Poor's likewise sees no global problems affecting the Russian economy. If the liquidity crunch in the world continues, Russia will suffer less than other countries in Europe, the Middle East and Africa, says a S&P study on sovereign ratings of EMEA countries. Russia will be helped by robust economic growth, direct investments, high consumer demand, low debt, gold and hard currency reserves, and a surplus budget, say Standard & Poor's experts.

High primary and energy prices are the main driving force of the Russian economy. As long as they remain high, an oversupply of funds, a headache for the Finance Ministry and the Central Bank, rather than low liquidity, will be the main problem for the country's financial system. "We do not expect raw materials to go down in price; demand is rising in the developing countries, in particular China," said Mikhail Rozin, general director of the Aton-Management company. "You need not worry about the Russian economy and its financial system in the next two to three years," said Andrei Klepach, director of macro-economic forecasting at the Economic Development and Trade Ministry.

However, one should not underestimate global economic processes. "No one has abolished the cyclical development of the world economy," he added. "The global growth we have seen in the past few years must cease and reverse," said Dan Rapoport, managing director of CentreInvest Securities investment company.

If the world financial systems are well and truly shaken, no stabilization fund will help to preserve stability in Russia. Imports have increased by 36% since the beginning of the year. They are growing at higher rates than the national economy. Experts agree this is a direct road to wiping out the current account surplus in 2009. But as soon as capital stops flowing into the country, Russia will find it difficult to meet global challenges to its financial stability. In 2010, Russia will inevitably face cyclic disturbances of the world economy, which will have affected it by that time.

The opinions expressed in this article are the author's and do not necessarily represent those of RIA Novosti.