The Russian Government has the only way to advance the national economic growth that President Vladimir Putin calls for – that is, increasing government spending, economists say. Other methods are not used, with no reforms underway and investment climate still unfavorable, Reuters reported.
This year, Russia’s GDP is expected to show the growth of only 1.3%, or 1% less that last year. In 2020, the figure is expected at 1.7%, less than the previously forecast increase of 2%.
In the Soviet era, the so-called collective farm and cooperative property was not state-owned. Due to this, the government’s share in the economy stood at 70-80%, according to Sergei Khestanov, economist and associate professor at the Russian Presidential Academy of National Economy and Public Administration under the President of the Russian Federation (RANEPA). Today, the government’s share in the economy is close to these figures, considering not only state and municipal enterprises but also dependent businesses.
“This explains why only government investments can hasten Russia’s economic growth. The problem is that the government’s opportunities for boosting expenditures are considerably limited by the state revenue, which, in turn, largely depends on prices for raw materials, mostly oil price,” the expert noted.