LIMA, October 11. Economic growth in Russia next year will most likely be in the negative zone. This forecast was announced to journalists by the former head of the Ministry of Finance, the head of Committee of civil initiatives Alexei Kudrin.
“I still remain on the forecast from minus 1 to plus 0.5%, a recession soon. The probability that is below zero, is above 50%. The main drivers (economic growth) absent: continued policy uncertainty, the government remains the decrease in real income, then the demand will stagnate, investment is also stagnating or shrinking, both public and private”, – he explained.
Kudrin also said that the freezing of pension savings and the reduction of gosrashodov reduce investment.
The Ministry expects next year the growth of GDP by 0.7%.
On the rate the fed in December or early 2016
The U.S. Federal reserve will raise its discount rate in December or the beginning of next year by 0.25 percentage point, predicts ex-Minister of Finance.
“It will either happen in December or early next year. I think there will be a small, very symbolic rate increase by 0.25%. It may be December, but no later than in the first quarter,” – said Kudrin.
He also noted that experts are too nervous before this event. “Interestingly, in all reports and statements concern the fed rate hike. If earlier, when the rate went down and introduced quantitative easing, emerging markets said that such an active, aggressive emission policies of the fed are concerned, then this has led to increased inflows into emerging markets. Now everyone is saying: you can not rush to increase, not go away from this policy,” says Kudrin.
According to him, quantitative easing policy is not causing concern at the current low inflation in the United States. “It’s not yet worried from the point of view of inflation. While we have not abandoned the previous monetary model. If inflation low in the developed countries and the United States, then, may well be it (QE) and not dangerous. But everyone understands that this monetary expansion once complete. I also think that all this goes,” he said.
On the possibility of reducing subsidies to state-owned companies within three years
According to Alexey Kudrin, the state could reduce subsidies to state-owned companies over the next three years, which would give positive effect for the budget balance and economic growth.
“In the whole economy, the reduction of subsidies can reach 1-2% of GDP. I think it would be right in the next three years to systematically reduce subsidies to state-owned companies. This is one of the largest sources, which could temporarily support the balance of the budget under current expenditure,” he said.
Kudrin also reiterated the need for structural reforms in the economy. “We need structural reforms: these include the reduction of state functions, state institutions, privatisation, withdrawal of subsidies, which today support loss-making inefficient companies – a whole spectrum, which is tedious to reform,” he says.
Simultaneously, the ex-Minister of Finance expressed astonishment with the creation within the Fund’s budget at the expense of pension savings. “Granted more powers to the government and reduced the powers of the Parliament, which, I think, in General, obviously reduces the transparency of the budget,” he said.
About the price of external placements for Russia in 2016
The price of external placements for Russia in 2016 could be very high, including in the yuan, said Alexei Kudrin.
“This is a period when the assess the risks. And the price can be high, you can stay, just the price will be high. At all (markets), the Asian including. The yuan is a very limited instrument today, so it requires caution,” he said.
The Ministry of Finance expects to attract domestic market next year up to 500 billion rubles, the external – up to $3 billion.
About the investors and the Syrian campaign
Investors rather disturbing part of the Russian Federation in the Syrian campaign, said Kudrin.
“Russia’s participation in military operations retains the risks, the more that the world community is still undecided on how this will be fighting with ISIL (the former abbreviation of “grouping “Islamic state”) and terrorism. Opinions are divided, so the participation in military operations creates additional risks for Russian policy,” he said. According to him, while the risks are “not explained by more foreign investors – the effectiveness and appropriateness; investors is always alarming, it’s obvious”.