The Ministry of economic development predicted 20 years of stagnation

The Ministry of economic development has developed and submitted to the Ministry of Finance three variants of the forecast socially-economic development till 2035, one of which suggests that the Russian economy will fail to overcome stagnation the next 20 years, “Vedomosti” reports with reference to the document.

This variant (the so-called basic plus) is based on a forecast of slow growth in prices of oil up to $57 per barrel in 2020, $70 in 2030 and $76,7 — 2035-m. In this case, as the MAYOR predicts that Russia’s GDP in 20 years will grow in 1,5 times. On average, the Russian economy in the next 20 years will grow by 2% per year (from 1.7% to 2.6%), which is approximately 1.5 times less than the average world rate, the newspaper said. Real incomes of Russians will grow on average by 1.4% per year and in 2021 will return to the 2013 level, according to the MAYOR. In 2035, according to the forecast, real spending will exceed pre-crisis level of less than 30%.

The investment will reach the pre-crisis level in the same year 2021, but the pace of growth will remain moderate, averaging 3.3 percent annually, said the MAYOR. Capital outflow, according to the forecast, will be reduced to almost zero. Exports and imports will grow by about 2% and 4% respectively, the trade balance and the current account will gradually shrink. The number of employed in the economy, according to the scenario “basic plus” in the next 20 years is almost unchanged (68.4 million in 2016, compared to 68.1 million in 2035-m).

Conservative scenario (base) the MAYOR was based on the preservation of oil prices at $40 a barrel in real terms for the entire forecast period (in nominal terms, the oil, in this scenario, will go up about $1 a year to $55 in 2035). According to this variant of the forecast, GDP will grow on average by 1.8%, while the number of employed in the economy will be steadily reduced all the years to 64.4 million in 2035. At the same time, the Ministry considers the forecast with the preservation of price of oil at $40 is unrealistic even for the next three years, according to “Vedomosti”.

The third (target) scenario is based on the same forecast of the price increase and roughly the same demographic parameters as the scenario “basic plus”. But due to the transition of the economy on the investment model of growth (improving the business climate, support non-oil exports, cost reduction and revenue growth of companies) is achieved ahead of the global growth, said the representative of the Ministry of economic development the newspaper. According to the target scenario, in 2019, the growth rate of the economy will exceed 4%, and the average for the years 2016-2035 will be 3.6% per year.

More rapid growth in domestic investment accompanied by higher (in comparison with other variants of the forecast) labour productivity and more rapid growth of incomes of Russians. The scenario also includes the net inflow of capital from 2020, but the current account balance will gradually to go into deficit due to the rapid growth of imports.

In mid-October, economists development Center-Higher school of Economics reported that it had documented “the first serious signs of a possible end to the recession” in the economy of Russia. At the end of September we expect their combined index (SOI) was published in plus (+0,2%) for the first time in three and a half years. In August, economic activity increased in 44 regions of the country, the decrease in activity was observed only in nine.

“Although these improvements occurred relatively openly depressed levels, and not always indicate the growth in economic activity (sometimes only on the slowdown of the decline), the reason for the formation of more positive expectations, of course, there was,” said the HSE.

The President of Russia Vladimir Putin at meeting on economic issues on October 18, stated that the Russian economy is “gradually emerging from stagnation.” “We note the objective data. Positive trends in a number of sectors and industries,” — said Putin. The challenge, he said, is to manage the transition to sustainable economic growth and stimulate entrepreneurial activity.