the news news hello and welcome to cross talk where all things are considered. i'm peter lavelle . we're here in saint petersburg at the international economic form. and the topic of our program is the global economy. how is it changed since coven? we're the winners for the losers. what are the challenges and what are the opportunities? i, i to discuss these issues and more,

i'm joined by my guess. here is luckily symbolic. he is headed spirit c, i b investment research. and we have alexis danko. he is president and ceo of the american chamber of commerce in russia. ok, let's cut to the chase general alexis, let me ask you 1st, you know, as an american living here for many years now in being in media myself, and i watch a lot of local media. and a lot of things are set about russia in global media, and we both know not all 3 of us known, not always very complimentary. so i want you to tell our audience here, as the pandemic started in russia like it did for the rest of the world, what were the immediate impacts on the russian economy? what did it slow down? what did the rail give us kind of a preliminary autopsy if you were well, the 1st thing that happened is people stop travelling and people stop living in hotels and people stop going to restaurants that was devastating for those businesses. and then they couldn't get permission to travel,

and they became devastating as a matter of people to people context. and that unfortunately has continued to this day and that started then as coven. so i would say those were the immediate impact longer term. if we look back this year, we asked our companies and we have over 400 near 500 companies, members of amsterdam, how they did it. most of them did quite well. i mean, better or, or because they found different strategies to deal with it. some had record years. the health care is one example. premium automobile. so health, oddly enough, but many had a difficult year, but most not as difficult as they feared. is it big because these are, i'm big on entrepreneurs. i'd like to much more over and government here is because

they, they had to, they had to develop very quickly strategies to start dealing with the unknown because it wasn't unknown. i mean, we all remember when this, well, i remember i was in my studio, we were doing cross. and my team here. they said they're sending us home. they're sending us know what. what does that mean? they're sending us home. ok. i mean, my immediate response will 10 days to 2 weeks, which of course wouldn't affect us. ok whatsoever, but then when we were told no, we don't know when we're coming back. i could surely in the summer, we have no idea. this is open ended here. and what cross my mind is that instantly people that had small and medium sized businesses, you gotta be quick on your feet here because it's probably not, and they're just rushes, no different than the rest of the world. you weren't given marching orders, they weren't telling you what you could do, what you can't do, you left up in the air here that demanded

a lot of decision making. remember degree of uncertainty and i think a lot of surveys of businesses, they show that this is unprecedented in terms of the scale of uncertainty. the uniqueness of the crisis was also that it affected both demand and supply the tremendous degree, and you had to react non just on the side of the businesses, but also the government had to react very quickly with this anti crisis support specifically, especially to small, medium sized businesses, including very important measures regarding the subsidized loans with regards to small and medium sized businesses. you needed to also provide at holidays. a lot of the other issues that had to be provided to the sectors that were adversely em, disproportionately effective, such as need. and it seems like these measures were well

targeted and i think they did support the recovery of me. but at the time the blow was very with was very rapid and you had to react both on the side of the business. and on the side of the gun, what i found really interesting is that even as we it before, the pandemic started in before the lock down. there was already the trend of trying to use to do the online advertising sales. all kinds of thing here. and that just made people think really hard and instead of thinking about it, start doing it because it was really interesting to me. if you look at like i could have on youtube and other platforms you saw, i saw a lot more russian companies online, which i knew who they were. but i didn't understand their, their online model. and they were adapted to remarkably quickly. and then you and then what we saw, i live in a new apartment complex and i would very often walk my dog. well,

if you were doing delivery services, wow. you went to the bank because that's all you ever saw with the delivery drug. and some people on bike and we should all, you know, we should be very thankful for those people in the front lines like all over the world. they, they had them adjust themselves to it. and i want to really stress to our viewers here. we were like everyone else in the world. i mean, how dangerous is this? how long has been enormous amount of uncertainty, but the economy kept going and i was very impressed by that. i could do everything i needed to do. i just needed my phone instead of walking out that was a real interesting learning experience. it was in the rush move moved, way ahead in that, and everybody did. i think russell was an early adopter for a lot of these technologies. i think apple pay rosa has the fastest adoption rate of any country in the world. so you know that there was, there was something that,

that was already being learned and then it became practice. and then it gives you said, how do you think it changes? what we would call the real economy. i mean, it was basically forcing their hand, we already knew this was going to go in the direction. i mean, we, you know, we all know the amazon model and all of that. but this just pushed the curve. absolutely. it was the unique challenge that has to be met with a response on the response work was there, just as you said, there was the shift in to be online segment that was very emphatic, both on the part of the consumers and on the part of the producers and you clearly had this significance shift towards the digitalization of russia's businesses which and turn it at a certain degree of innovation because it was such a unique unique situation. and i think that the,

you clearly see that in terms of the share of online sales in terms of the share of the digital economy, all of that has increased tremendously. and that i think, is going to solve one of the ill of the russian economy. that we've discussed before, so many times the productivity exact productivity was not willing for enough work quite some time. and i think that shift and geared towards greater digitalization, which is regular supported by the current government is going to, i think, significantly improved and, and they got the that they the best of both of the best of all possible worlds because we got increased productivity in greater transparency, which of course the government likes because of, of the tax role. so think, i mean, is that the over the years we've known each other a long, long that we've been through a number of crisis is together? well, i remember very clearly, and we always talked about if the, if the challenge of productivity can be met and may. and very often,

if you play your cards right, a crisis can turn into an opportunity and i see a lot of, except for the brick and mortar shop, you know, they're the ones that are really hit very, or you're thinking, you know, you can see the scars yes, he's in the garden ring, all the you know, every 3rd story is, is open for, for, for rent. one of the interesting things too is that one of the, i'm actually very fascinated with the russian, very into consumerism. because russian love the shop. and i still think they do ok, but i think it's taken on a very different experience. i mean, a number of my colleagues would say, particularly with women's apparel, they will go to the store and find their right size, then go home and order it online. okay. that is a new new strategy that people have, which of course has a long term negative effect for brick and mortar operation. oh,

absolutely. and what we see more recently is recovery and consumer confidence. i think this is very encouraging. obviously the peak of the crisis. we produce this regular publication called the even off survey, which looks to the consumer confidence across all of the region of the russian. we saw a very in fact a blow to consumer confidence in the peak of the crisis. now we're seeing in the past several quarters a significant recovery. so just say in layman's terms, people are holding on to their cash and waiting to see when they could open up the 1st strand and they're ready to start spending. and part of the reason is the improvement and economic activity that we're starting to see in the past several months. march of this year was the 1st time that russia actually went in the positive territory in terms of growth on your, on your basis. you're seeing that well projections for russia are starting to

improve on the side of the international organization last year. actually russia, whether the prices better than the global economy and russian decline was around 3 percent for the global economy. it was closer to for, for the vast economies, it was significantly more than that. so actually, it seems russia has demonstrated adaptability to this unique, unprecedented crisis. and i think we're starting to see the momentum in terms of the consumer and terms of small and medium sized businesses towards recovery. you know, one thing before we go to the break here, one thing i noticed through the stats that i never thought i would ever see in this country, and i've been here 20 years, plus russians saving money, a unique phenomenon. ok. there's no go out there vend, but people are saving it, big because it's difficult to spend because, you know, i mean you and actually in, for people to understand, even if you're buying something online internationally. they had all of these

protocols where they had to be, you had to change the routing movement. they had, they created new hubs, where they would do distribute a distribution which turned in from 2 weeks to 6 weeks. a weeks sometimes longer for a delivery here. but it was pent up demand and, and i want to, in the 2nd part, i want to talk a little bit about an inflation because that's an issue that is affecting everyone in the world and different places to different one degree or another. but i mean i'm, i'm glad you said you to top up the 1st part of this program here. there was a lot of learning done. and this is something that we've talked about for the many, many years that you and i have known each other. all right, i'll not know if there are gentlemen. we're going to jump to, i'm going to jump in here. we're gonna go to a short break. and after that short break, we'll continue our discussion on the russian economy. stay with the

me. ah, cruise in the the, i don't know, i mean there are some steps in there were rescuing the food that they were not scabbing or were rescuing resources that are still good. this is best buy march 21st, which is in 2 days. all these potatoes, holla, pianos, onions, all of these came from waste brown sources. this is great for me

because i'm always looking for a way to give things away. dr. because the tax laws, you know, definitely do benefit the wealthier people and our society. so it makes sense for them to throw it out right off rather than give it to somebody who could use it and then that person is not going to buy it. ah, welcome back to cross talk. we're all things considered. i'm peter belt, remind you we're talking about the condition in future of the russian economy. ah, ah, okay, i'm going to go back to a spot here. you are about to say something when we went to the break i was talking about in place. go ahead. yes, inflation is one of the key issues for not just for russia,

but for the global economy as well. and a lot of the inflation momentum that russia seeing is experiencing is coming from abroad. it's a global phenomenon. the us exports a lot of inflation, us exports, lot of inflation. a lot of the developing economy, the same, not as much china, china is actually not passing as much of an inflationary impulse so far. but it could, if the companies in china decided not to absorb the greater cost that they're experiencing because of higher raw material prices right now and decide to pass around. so there is potential in the global economy for inflation to further pick up. and russia seems to be starting to prepare for something like that. we're starting to see that the cpr is increasing is q rate and has done so already several times. still inflation is around 6 percent. where is the target for rushes

for? so we're at a situation whereby clearly the central bank will need to undertake further measures to bring inflationary pressures that we need to point out to our viewers here. the scourge of the russian economy for a long time was inflation and there, you know, people can, you know, it's really interesting. you know, when i talk to foreigners last me, you know about, you know, what it russians talking about, you know, they, are they talking about putting in the government and all that? no, not so much. so talking about how much things cost in the shop, and that was something that for 15 years, you know, and it was simply the most important worry on the mind of russian number one issue has always been a question. so this is a challenge for the government here right now, because people have when you think of the last 20 years, with the exception of the great, from the other great recession in 2008 to 2009, 10. we've seen upticks in this economy here, a lot of expectations for prostate as prosperity and stability here. and then we

get this outside shock this pandemic here. but inflation isn't as bad as it was, but people are still very, i mean it's the worst middle class tax you can imagine here and, and particularly on business is that it's probably the biggest challenge for the government right now. well it's, it's one of it's a tough challenge. who i would say this though, i think the rasa right now is better positions to deal with inflationary pressure than it was back in 1516 when the all price crust and the ruble devalued by 50 percent. that really hurt mean that was inflation big time and it really hurt the, the rest and consumer. today we were, we think our members think that we're going to see a rubel at the same level, or maybe even a little stronger at the end of the year, which is essentially negative inflation to us and or the new normal. because i've had this argument over and over again, this is more or less the new normal where $70.00 to $7475.00 to the dollar,

where we now have a new normal. that would be really great. it's an unusual reversal. i don't want to tell you how painful for me. ok, i was low to make adjustment for me. put it that way. i still remember those things very bitterly, but i could have been more proactive. ok, the, the exchange rate has been one of the key drivers of higher inflation pressures before. now we're seeing greater stability. the government introduced have a mechanism including several rules. they can amik policy rules like the fiscal, that keep the exchange rate far more stable than before. otherwise, what the wild swings in oil prices that we seen there would have been far more volatility in the room. is this part of the is decoupling of the economy? because this is the biggest criticism, it's a petro state, it's a dying pet that all the time and critically conservative media in the united states. here what has been down to decouple that will be the fiscal rule is very,

very important. here. i have, they made progress and it's sustainable. we're seeing one of the lowest level of correlation interaction between the ruble and oil prices and the accomplish. i think it's very important accomplishment, and this is because of the fiscal rule, which essentially make swash as economy operates as the world prices are at a constant level well above $40.00 per barrel. so it's, it's something that significantly lower the volatility and allows more for the ability in the system and the economy for businesses to plan ahead and to be less susceptible to these well swings them in the exchange rate. what is happening at the same time because of the crisis is things like migration flows, we're still lifting. lee affected because of the covert crisis, and russia was one of the largest recipient of labor migrants in the world. so

because these migrants cannot come to russia, now, you have shortages of labor and some of the segments of the economy like construction, for example. and this obviously is also delivering certain certain inflation requests. you know, one of the, one of the most important issues i, i think we passed, governments have not put enough attention to any money. but given the kind of growing sanction mania, which i don't think is over yet, particularly from russia's so called western partners. if i can use the language of the foreign ministry partners, this is time to look inward. this is, it's about the regions of this country, this country is the richest country in the world, and it's not rekey reaching its productivity potential. and i, and i think that i would like to see so much more investment inside the country. i think you're hitting on a really sensitive point, which is what we've been discussing is russia's very successful macro management of

it. the fundamental foundation, the found area, conservative cancer, world data, very, very firm foundation. but the, of the building of the superstructure is work and you know, we've got, you mentioned innovative comp, these innovative investment. they're usually fueled by venture capital. venture capital is a little bit afraid of russia, given that the are most successful venture capitalist has spent most of the last 3 years in prison or house arrest those, those are issues really for the rest of government to address you know, what kind of society, what kind of incentive to build a business. do you provide or is it really just another threat? just another risk i think you know, for on that side i would love to see their us and government do more. i agree completely. i think there are so many levels of over centralization that you have.

and the reduction in this excess of centralization will deliver massive impulses for growth, including the regional space. russia has one of the highest and the qualities across regions in the world. a lot of concentration in moscow, clearly there is an over you need for greater investment into regional infrastructure. there are these national projects that were basically developed by the government in the past several years. and that are meant to do precisely that to develop infrastructure to develop human capital education, health care, most notably in the region, and this is trillions, enjoy the rules. this is one of the most important spending kind of tickets that the government has for the next several years. and this is probably if, if it does take place a bit as well, targeted, efficiently spend it could really radically significantly improve the situation. i mean, i will speak for myself here. i think it's a national security issue as well,

because when you have a turbulent world out there, a lot of things are happening. you see this confrontation, growing, confrontation between the united states in china, which both countries are saying it's unspoken now, but it's going to become very loud in my opinion, at least very soon as you have to start picking sides of one or the other. we have a bifurcated world. ok, and a lot of countries in the world, russia is a big power. it can make its own decisions. ok, lot of other smaller countries that we're going to be pulled back and forth back and forth. you will be the countries that are be in the best position to deal with that is when they built up their own internal industry productivity and future projections because and that creates political stability as well. so i would say investment in the regions is a national security issue in a very turbulent world known we can't disagree with me on, i'm not, i'm not good if agree with you at all on the i, i would say,

i mean to your point about picking side, that's a very dangerous condition to be in one country when countries happening, making it happen. okay. and in terms of, you know, russ in the u. s. i can't really 2 sides. i have grandchildren with ross and passports and grandchildren with american passports. and so, you know, my best option is what an internment camp summer optionality you need optionality, you can be dependent just on one region on the one market. i think russia is clearly making this effort to look for options in the east, not just china, but also awesome country is actually during the st. petersburg form, one of the beans is ascii, and this is a very dynamic, very promising market. i think more generally the global south, the, you know, other directions of ex were new markets. this is something i mean, again, i mean,

i'll be the political guy have no problem with that. ok. there's no political conditionality attached to it. ok. i mean, if, when there's a lack of political conditionality that actually reaches the wheels. ok because you don't want to, oh, can we use the dollar? shouldn't use a dollar. we have be afraid of a sanction this financial into the or the, or the u. s. department of treasury terror using you. ok. i mean these are the impediments to global growth. yeah, i think asian, this regard is very critical, engine of growth and demand. and the post crisis world. china was the 1st one to recover from the crisis. it's a crucial, very important sort of demand and an important destination accordingly for export. so i think asia is growing and it's becoming more open as well. is russia making that pivot is that is that's what we're speaking to because it has to or that's where the opportunity or both, where the opportunity is. i think increasingly because this is the reason that has

opened up a lot of the other regions, including a lot of the advanced economies, are still in the midst of, you know, restrictions in terms of protectionism, et cetera. asia has actually in the past several years come up with the largest free trade area in the world, the regional comprehensive economic partnership that was championed by china and young country. so this region is becoming more open and it is willing more rapidly than the rest of the world. it's a no brainer. i would, i would add one thing i, you know, no man is an island and no country can go it alone. so i don't think that there is no, there is any country big enough really to try to shut itself in and do it all by itself . so they entered interdependence that we've gained or lost. i agree with the principal, i agree with you there and it's there for over. but you didn't want to make sure that countries have options, as you said, okay. and not, you know, not facing sanctions and even worse. okay. as the political situation in the world

changes ebbs and flows are a gentleman. i'm not known. we're going to end the program here. i want to thank my guest here in saint petersburg. the international economic form want to think our viewers are watching us. here are the next time, remember across the who's the when i would show the same wrong. why don't just don't the yes to shape out. the thing becomes the after kid and engagement equals the trail. when so many find themselves will depart. we choose to look for common

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