Russia Expects Weak Economic Growth For At Least 16 More Years
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
Russia’s economy ministry has slashed its long-term growth forecast through to 2030, warning that falling investments and exports could lead to an era of stagnation behind the rest of the world.
According to Economy Minister Alexei Ulyukayev on Thursday, Russia’s GDP will rise by just 2.5 percent on average for the next 16 years – below a 4 percent target originally set by President Vladimir Putin before his return to the Kremlin last year.
Russia’s economy ministry has slashed its long-term growth forecast through to 2030, warning that falling investments and exports could lead to an era of stagnation behind the rest of the world.
According to Economy Minister Alexei Ulyukayev on Thursday, Russia’s GDP will rise by just 2.5 percent on average for the next 16 years – below a 4 percent target originally set by President Vladimir Putin before his return to the Kremlin last year.
Ulyukayev also admitted that domestic factors, rather than external conditions, would be responsible for Russia’s weaker growth, believing that the Kremlin had failed to pursue reforms and diversify the economy during its boom from 2000-2008, when the price of energy and commodity exports had soared. Annual growth at that time averaged at more than 7 percent.
“The factors behind sharp economic growth in the pre-2008 crisis years have been exhausted,” Ulyukayev said, as cited by Reuters.
[quote]”The pace of Russia’s economic growth will fall behind the global average in the forecast period…The average rise in the gross domestic product will range between 2.5 and 3.0 percent until 2025…[before] a certain drop-off in the last five years starting in 2026,” he predicted.[/quote]Among the problems Russia will face include persistent capital outflows and low rates of investment – due to the business community’s concerns over corruption and the rule of law. Ulyukayev said he expected capital investments in the period to fall to 4.3 percent from the 4.7 percent envisioned at the start of the year.
Related: Post-Soviet Russia Sees $764 Billion In Total Illicit Flows: Report
Related: Nearly $50bn Left Russia Illegally in 2012, Reveals Central Bank
Related: Half Of Russia’s Labour Force Employed In Shadow Economy: Deputy PM
The Economy Minister’s pessimistic outlook is unlikely to sit well with President Putin, who had pledged in the past to turn Russia into a top-five economy by the end of this decade.
Yet analysts Reuters spoke to said that there was little room for growth, especially as the economy is still heavily reliant on energy exports.
A poll of 21 economists released by Moscow’s Higher School of Economics on Wednesday also showed expectations of below 3.0-percent annual growth for the next nine years.
Related: Russia: An Economy in Transition, Dysfunctional but Intact
Related: Russia’s Privatisation Drive: Roadblocks Ahead?e
[quote]”Three-percent growth, which just recently seemed incredibly low, now looks almost unreachable,” the Higher School of Economics report said, as cited by AFP.[/quote]“Most experts have a negative view of the government’s excessive economic intervention, the quality of state and other regulation, lack of competition and excessive military spending,” said the review.
It added that a worrying 68 percent of the economists said Russia could soon face “an economic crisis linked not to a drop in the price of oil, but exclusively domestic factors.”
