Alexei Vedev Explained Unrealistic Forecasts of the RF Ministry of Economic Developmen

Over the past 13 years, officials of the RF Ministry of Economic Development have developed minimum four long-term forecasts with expectations of high growth rates of the economy and households’ incomes, as well as predictable inflation. However, almost all indicators laid in the documents failed to materialize. At first, they were disrupted by the crisis of 2008–2009 and the crisis of 2014–2015, while later, by the COVID-19 pandemic. Alexei Vedev, Doctor of Economic Sciences, Head of the Financial Studies Department, Gaidar Institute told the Izvestia daily why the agency in question developed unrealistic forecasts.

At present, the development of long-term economic forecasts is supervised by Polina Kryuchkova, Deputy Minister of Economic Development.

Alexei Vedev who held that office from August 2014 till February 2017 says that the development of long-term outlooks is necessary to foresee possible structural changes. Also, this is needed for long-term budget and social services planning, for example, pensions. At the same time, the precision of the forecast’s specific indicators is not very important, the expert believes.

“It is not that important to guess the figures right. But in long-term forecasting I have always stood for moving away from nominal figures and dealing with ratios, for example, GDP shares,” Alexei Vedev noted.

According to Alexei Vedev, there is also another aspect in long-term forecasting.

“The released forecasts were too optimistic and it is quite clear from the political point of view: the Agency which is responsible for economic growth cannot be cynical,” Alexei Vedev explains.

Also, it is noteworthy that officials have never been held responsible for unfulfilled expectations, Alexei Vedev added.