Vulnerability increases due to poverty reduction
The income of many Russians has decreased in 2015, noted in the latest report on the Russian economy prepared by the world Bank. Because of this, 8% increased the share of “vulnerable populations” whose incomes at purchasing power parity (PPP) is less than $10 a day (in 2005 prices). “This is a significant increase, which negates many of the successes of the past years results for universal prosperity”, emphasized by the economists of the world Bank.
We are talking about citizens that are 40% of Russians with the lowest incomes, and people from the middle part of the income distribution. Thus, the number of citizens with incomes less than $10 a day at PPP reached 51%, estimated by the world Bank. The increase by 8 percentage points of this share in 2015 was greater than the growth in 2009, “reversing the many achievements of recent years in improving welfare,” write the report’s authors.
$10 a day is used by the world Bank the minimum income required in order that man might be considered middle-class.
Formally, the level of poverty has decreased, this contributed to the slower growth of the subsistence minimum. It is thanks to him “some households belonging to the lower part of the income distribution were able to get out of poverty, despite a slight increase in nominal revenues,” the economists point (considered the first half of 2016, when the incomes below the subsistence minimum was 14.6 percent of the population, which is 0.5% less than in the same period a year earlier).
Real incomes of Russians has continued to fall after the first half. In the third quarter they declined by 6.1% compared to the same period last year. This, as noted by the experts of the Ranepa, was a record decline since 1999.
In 2016 the poverty level in Russia will drop to 13% (last year it was 13.3%), analysts expect the world Bank. After another year it will drop to 12.2%, and in 2018 — to 11.8%. This, according to the Bank, will help with slowing inflation and accelerating wage growth.
“Positive” in the economy will help diversify
The situation in the Russian economy as a whole “looks positive” and the power “skillfully cope with multiple shocks, although their actions and are reactive in nature,” the report said. The world Bank provides data for the first half and concludes that the recession continues, although more medlennymi pace helped the dynamics of the non-tradable sectors (goods and services that are consumed domestically and not traded internationally), their negative contribution to the GDP was a negative 0.5%, while a year earlier it was on the level and 2.8%.
While technically the recession in Russia has ended. Vnesheconombank announced that in the third quarter for the first time in 2014, recorded quarterly growth by 0.1%, “close to zero” growth and said the Central Bank.
The world Bank has improved its forecast for the Russian economy in 2016: fall of 0.6 percent instead of the previously expected 1.2 percent. In 2017, economists, GDP will grow by 1.5% and in 2018 — by 1.7%. However, the authors of the report proceed from the fact that oil prices in the next two years will grow up to $55,2 $for 59.9 per barrel, respectively.
But it is unlikely that economic growth would hinder its diversification, because there remain risks due to raw material prices and sanctions, analysts say. It is more than 50% of the industries of non-oil exports is declining (in the first half), and the substitution, “apparently, does not have a noticeable impact on economic growth and reallocation of factors of production.” Thus, the process of diversification is slow, let it as a low level of capacity and labour supply, and structural and institutional constraints, “which need to be addressed first”. To help speed it up, according to economists, can reduce uncertainty in economic policy.