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with ah 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 what we symbolic. he is headed spare, c i b investment research, and we have alexis or jenco. he is president and ceo of the american chamber of commerce in russia. ok, let's cut to the chase general lexus. let me ask you 1st me as an american living here for many years now and being in media myself and i watch

a lot of global media. and a lot of things are said 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 that became devastating as a matter of people to context. and that unfortunately has continued to this day and that started then as proven. 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, much, 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 say health world. oddly enough, but many had a difficult year, but most not as difficult as they feared it be, because these are the i'm big on entrepreneurs. i'd like on to her as much more over in government here is because they, they had to, they had to develop very quickly. strategies just are dealing with the unknown because it wasn't unknown. i mean, we all remember when they saw, 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 home. what does that mean? they're sending us home. ok. i mean my immediate response. well, 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 crossed 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 that 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 that tremendous degree. and you had to react not just on the side of the businesses,

but also the government had to react very quickly with the anti crisis. the board specifically especially too small and medium sized businesses, including very important measures regarding the subsidized loans with regards to small and medium sized businesses. you needed to also provide pack holidays. lot of the other issues that had to be provided to the sectors that were adversely in disproportionately affected, such as 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 that 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 kind of 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 it 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 or 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 to adjust themselves to it. and i wasn't really stressed to our viewers

here. we were like everyone else in the world. i mean, how dangerous is this? how long it's 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 and, 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 it was, it was something that, that was already being learned and then it became practice and then it gives you do you think that 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 director. 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, and the response were, was there just as you said, there was the shift into the 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 significant 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 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 ills 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 in years towards greater digitalization, which is regular supported by the current government is going to, i think, significantly improve 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 rolls. 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 together as 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 in turn into an opportunity and i see a lot of except 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 cars. yes. these in on the garden ring all the, you know,

every 3rd 3rd is, is open for, for, for rent. one of the interesting things too is a, 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, a 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 at the consumer confidence across all of the region of the russian. and

we saw a very fat, a blow to consumer confidence in the, in the peak of the crisis. now we're seeing in the past several quarters a significant recovery. so you just say in layman's terms, people are holding on to their cash and waiting to see when they could open up the per 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 into positive territory in terms of growth on the your, on your basis. you're seeing that well, projection 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 russia decline was around 3 percent for the global economy. it was closer to for, for advanced 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, medium sized businesses towards recovery. you know, one thing before we go to the break here, one thing i noticed through the stat 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. those difficult to spend because, you know, i mean you and actually, for people to understand, even if you're buying something online internationally. they had all of these protocols where they had to 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 impacting everyone in the world in 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. you and i have known each other. all right, i'm not know there gentlemen, we're going to jump to, i'm going to jump in here. we're gonna go to a short break. and after the short break, we'll continue our discussion on the russian economy to stay with the me the, the, the the, i don't know, i mean i,

some fits in there were rescue food that they were not discouraging or, or where were rescuing resources that are still good, this is best by march 21st, which is in 2 days. all these potatoes, hall panels, onions, all of these came from waste round 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 in our society. so that makes sense for them to throw it out right off rather than give it to somebody who could use it, then that person is not going to buy it. ah, welcome back to cross talk. we're all things considered. i'm peter. remind you, we're talking about the condition and future of the russian economy. ah,

ah, okay, i want to go back to the euro spot here. you were about to say something when we went to the break, i was talking about inflation, 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 inflationary 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 decide not to absorb the greater costs 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 seems to be starting to prepare for something like that. we're starting to see that the cpr is increasing is key 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, it's really interesting, you know, when i, when i went to foreigners asked me, you know, about, you know, what russians talking about, you know, they, are they talking about putting in the government and all that, no, not so much was 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 minds of russians. number one issue has always been, and 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 finitely of the great recession and 2008 to 2009, 10, we've seen upticks in this economy here, a lot of expectations for prostitute 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 particularly on business. is that 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 roster right now is better positions to deal with inflationary pressure than it was back in 1516 when they're all priced crust and the room will be valued 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,

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 arrest him or the new normal. because i've had this argument over and over again, this is more or less the new normal. we're $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 it was for me. ok. i was low to make adjustments when we put it that way. i still remember those days very bitterly, but i could have been really 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's introduced, have a mechanism including several rules. they cannot policy rules like the fiscal, that keep the exchange rate far more stable than before. otherwise, with the wild swings in oil prices that we seen,

there would have been far more volatility in the room. is this part of this decoupling of the economy? because this is the biggest criticism, it's a petro state, it's a di impact is that all the time and critically conservative media in the united states here. what has been down to d cup hold that ok, the visit would be the fiscal rule is very, very important. here 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. in the accomplish. i think it's very important accomplishment, and this is because of the fiscal rule, which essentially makes washes, economy operate as this 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 war 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 with what is happening of the same time because of the crisis is things like migration flows were significantly 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 replace requests . you know, one of the, one of the most important issues i, i think we pass governments have not put enough attention to 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 of the language of the foreign ministry partners, this is time to look in word. 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 flight, which is what we've been discussing is russia's very successful macro management of it. under mental foundation, the found very conservative around the world down very, very firm foundation. but the of the building of the super structure is good for work. and, you know, we've got, you mentioned innovative companies, innovative investment. they're usually fueled by venture capital. venture capital is a little bit afraid of ross a 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 then if to build a business, do you provide or is it really just another threat? just another risk. i think, you know, for on, 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 success of centralization would deliver massive impulses for growth, including the regional space. russia has one of the highest inequalities across regions in the world. a lot of concentration in moscow, clearly there is an over you need or 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 truly isn't really the rule. 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 span. 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 and china, which both countries are saying it's unspoken now, but it's going to be come very loud. in my opinion, at least very soon. you have to start picking sides. ok, 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'll 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 as a national security issue in a very turbulent world. knowing that we can't disagree with me. i'm not, i'm not good. if i agree with you at all on the i, i would say, i mean, your point of 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 russian path, birth and grandchildren with american health. and so you know, my best option is what an internment camp summer optionality you need optionality can be dependent 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 for one of the theme

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 mark. this is something 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, when there's a lack of political conditionality that actually greece is the wheels. ok. because you don't want to, can we use the dollar? shouldn't use a dollar. we have be afraid of a sanction this financial until the or the or the u. s. department of treasury terrorizing you. ok. i mean these are the impediments to global growth. yeah, i think asian, this regard is a very critical engine of growth and demand in the post crisis world. china was the 1st one to recover from the prices. it's a crucial, very important source 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 sitting in the laser because it has to or that's where the opportunity or where the opportunity is. i think increasingly because this is the reason that is opening up a lot of the other reasons, including a lot of the advanced economies are still in the midst of, you know, restrictions in terms of protectionism, etc. asia has actually, in the past several years come up with the largest free trade area in the world, the, the regional comprehensive economic partnership that was championed by china and young country. so this region is becoming more open and it is whoa, in war rapidly than the rest of the world. it's a no brainer. i would, i would add one thing. i 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 forever. but you just want to make sure that countries have options, as you said, okay. and not, you know, not facing sanctions and even worse. okay. as a political situation in the world changes. emerson close. alright gentlemen, i'm not known. we're going to end the program here. i want to thank my guest here in st. petersburg at the international economic form. what i think our viewers are watching us here are the next time. remember across the when i would show the same wrong. when all rule just don't rule out. the thing becomes the aptitude and engagement equals the trail.

when so many find themselves, well, the part we choose to look for common ground as a korea professionals board is much tougher on some than others. she was a year old myer by everybody. so why would somebody believe me? i was just a little girl. the price paid to, to, to achieve really was was how to read in the paper this morning. usa swimming coach, arrested, allegedly had sex with a 12 year old girls. this happens almost every week. we get calls at the office. i get informed about one of my greatest fears is someone's going to start linking all this together. there's going to be a 60 minute documentary about youth coaches in sports like gymnastics

swimming. is that documentary? i see it on our tea the, the group of 7 leaders meet for the 1st time since this starts of the pounds demik with vaccines and climate change high on the agenda. but there's also a focus on russia and china. my colleagues do feel a sense of deep so simply trial. we have young police officers who by age alone will not be vaccinated. how can not be once you k police chiefs, raise the alarm over a lot of bucks and nations for the for the mid fears. the $5000.00 on job officers at the g 7 summit could become cobra super spreaders. while in new york, parents declare a war and walk indoctrination of schools putting up billboard.