Economists warned of a “lost decade” of Russia


The recession in the Russian economy continues, albeit in less acute than before the form, the report of the Institute “development Center” NRU Higher school of Economics (HSE). According to the assessment of its experts, the depression in June 2016, has experienced all sectors of the economy, in addition to the industry and wholesale trade, and all Federal districts except the southern. The number of regions in which all five key sectors of the economy showed a decline, has increased from four to 12.

“The share of the regions in which reduced all five sectors of the economy growing, or only one of the five, remains very high. Distribution of subjects of Federation at different levels of economic activity in June 2016 clearly does not give reason to expect speedy completion of a recession,” the report notes.

Modest GDP growth recorded by Rosstat in the second quarter of 2016 (after seasonal adjustment GDP compared with the previous quarter increased by 0.1%), HSE experts say temporary phenomenon and not a change of direction of the economy. Among the interviewed analysts, there is not one who would not expect reduction of GDP by the end of 2016, according to the report. According to the consensus forecast, the GDP in the current year will be reduced by about 0.8% and a growth rate of about 2% per year Russia’s economy will be able to reach only by 2020.

In General, the HSE do not expect a sharp aggravation of crisis phenomena in the Russian economy, but the prospects for a sustainable recovery of its growth is also represented for them the “highly questionable”.

The current situation in the economy the report of the HSE is assessed as “fragile balance with the sign “minus”. The HSE experts emphasize that without showing a positive trend, the economy is gradually “rots, losing chances for the resumption of growth.”

“If GDP in 2016 will be just 1.3% higher than in pre-crisis 2008, just in time for the elections in 2018 may be the theme of a “lost decade”, warns the report.

Serious risk HSE experts see in that a lack of resources for financing the previously adopted government obligations may be decided on further centralization of economic management, which in the future may lead to total dysfunction of the economic organism.”

“This is due, primarily, with a technical inability to make the millions and billions of correct solutions from a single center. To think that officials will ever be able to adequately determine the best sites for investment, in our view, is simply idealism and even to some extent naive,” — warn the authors of the HSE report.

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