The MAYOR suggested to overcome the crisis through the decline in real income of the population


Ministry of economic development has proposed a scenario of exit from the crisis, basic recipes which are based on the reduced income and purchasing power of the population, writes “Kommersant”. The publication reviewed the revised draft of the macroeconomic forecast of the Ministry for the years 2016-2019, according to which real disposable income is expected to contract 2.8% in 2016 and 0.3% in 2017.

The plan, according to the newspaper, represents an alternative to the proposals of the social block of the government to restart growth model 2011-2013, which was founded “to support domestic demand growth of incomes in the budget sector”.

The project the MAYOR intended to limit wage growth in the economy in 2016-2017, followed by compensation in 2018-2019, the reduction in real pensions by 4.8% in 2016 and 2% in 2017, with a further indexing only to inflation until 2019.

“This, according to the economy Ministry, will increase the number of poor from 13.1% in 2015 to 13.7% at the end of 2017, with a peak in 2018 at the level of 13.9% and a real return of income and the number of poor by the year 2015 in 2019”, — the newspaper writes.

This assumes that the reduction in income will be accompanied by accelerating investment growth from 3.8% in 2017 to 7.1% in 2019 — by which time they expected to reach 24.1% of GDP. The main source of investment are not household savings and corporate profits, which in 2018 is expected to grow (without devaluation effects) by 12%, and in 2019 — by 10.8%, the newspaper notes.

Investment growth should also occur due the state “strategic and efficient investment projects” and will be accompanied by the advancing growth of investments into innovative sector of economy”. That is, the investment will be not only private, but also public funds from the national welfare Fund, says “Kommersant”. The outflow of capital in 2019, according to the authors of the forecast, is reset.

The forecast made in the base, and conservative target options, with the latter based on the proposals of the MAYOR to the White house on economic policy until 2019. The main goal of 4.5% of GDP in 2019. GDP growth in 2017-2018 for the target scenario are lower than expected of 0.4% (previously 1%) and 2.9% (previously 3.3 per cent).

The newspaper believes that in the target scenario, the stagnation of 2015-2017 de facto announced the inevitable: significant growth can begin only after the presidential elections in 2018″. The basic and the target scenario were rewritten after the Cabinet meeting on April 21: if previously it was assumed a moderate increase in the average annual oil prices to $50 by 2018, the new version is set at $40 per barrel.

As wrote the newspaper “Vedomosti”, may 25 will be a meeting of the Presidium of the economic Council under the President of Russia, which will discuss the sources of reaching an annual growth rate of 4% of GDP in the medium term. On the podium should be the head of the MAYOR Alexei Ulyukayev. In addition, the expected reports of the Stolypin club, and the Center for strategic research, which is chaired by Alexey Kudrin.