Rely on Economic Growth in Russia?

  • Business - 31 October 2016, 21:03
During the presentation of the 2017 budget the minister of finance Vardan Aramyan said they expect a 3.2% growth of the GDP. According to the minister, there is a favorable climate for growth, including the reconstruction of the Russian economy.

“Next year the international organizations forecast a little acceleration of the growth of world economy – 3.4%. This growth is mainly expected in developing countries in a period of transition after the specialists inform that the Russian economy has sunk to the bottom. This will certainly influence us positively,” he said.

Today the Russian ministry of economic development has published the results of monitoring according to which in September 2016 the country’s GDP has decreased by an annual 0.7%, and by a monthly 0.2% against August.

According to the ministry data, compared with September of the previous year, volumes of production in factories have dropped by 1.6%. In September, compared with the same period of the past year, the volumes of textile decreased by 4.9%, shoes by 9.7%, cast iron by 9.9%, cars 3.6%. In the meantime, chemical industry grew by 4.6% in the first 9 months of 2016, which is mostly determined by the 25% growth of synthetic rubber.

Earlier, the Russian state statistics service had reported the record low of production in September since January.

OECD forecasts economic growth in Russia in 2017 thanks to increase in the real income of the population and decrease in inflation. Nevertheless, the economic reconstruction will be slow, the reason for which is the lack of systemic reforms and uncertainty of oil prices.

According to the forecast of the European Commission, despite the forecasted slight growth in 2017 the prolongation of sanctions will have a negative impact on economic confidence and will not favor the improvement of the investment climate. The fluctuation of oil prices will put extra pressure on the financial sector, the decrease of extra income and the fall of the ruble may also have a negative impact on the forecast of economic growth.

Next year the International Monetary Fund forecasts a 1% economic growth in Russia, which is determined by the forecast of growth in oil price.

In mid-September the Russian Central Bank forecast a 0.5-1% growth while in June it forecast a 1.1-1.4% growth.

Though there are optimistic forecasts that the Russian economy has hit the “bottom” and will start growing, the Russian minister of finance and member of the Economic Council adjunct to the Russian president Alexey Kudrin thinks the country’s economy may stay at the bottom long unless reforms are carried out. The experts of the High Economic School also think that the Russian economy has reached its record low and is stuck there.