In his address to the Federal Assembly, Russian President Vladimir Putin clarified when the country can expect faster economic growth.
According to the President, Russia’s GDP growth will get ahead of the global GDP growth as soon as next year. Currently, the growth rate is significantly lower. While global GDP grew by around 2.5% over the last year (precise data to be released), Russia’s GDP grew by around 1%. By 2021, the World Bank predicts a growth rate of 2.6% for the global GDP and 1.8% for Russia’s GDP − although the Russian Ministry of Economic Development is indeed expecting 3% like the President promised.
The worldwide average GDP growth is 2%. For Russia’s GDP to exceed this average, the country’s economy must grow by 12% every year. In order to achieve this and become a top five leading economy, Russia plans to improve its investment climate, build new and upgrade existing transit and energy infrastructure, develop competition in the financial market, ensure accessibility of financial services, increase labor productivity, create conditions for small and medium-sized businesses, support exports of Russia-produced goods and services, according to AMarkets Analytics Director Artem Deev.
“We also need structural and institutional reforms that will allow Russians to fully exercise their entrepreneurial initiative. It is important to lift excessive restrictions off labor and capital markets, and ensure productivity growth,” the expert clarifies. “But the government’s priority must lie in improving the wealth of people since it will trigger consumer demand and serve as the basis for the economic development of the entire country. At the same time, we must prevent changes in the macroeconomic policy. This means inflation must remain low, the Central Bank must continue relaxing its fiscal policy and the banking sector needs further recovery. The same applies to the policy of budget consolidation that is, cutting down on government expenditure through its effectiveness.”