Alexey Vedev, leading researcher at the Gaidar Institute’s Financial Sector Department, assessed economic growth outlook, the state of the budget and the dynamics of non-oil and gas revenues in comments to “Svobodnaya Pressa”.
According to Alexey Vedev's assessment, Russia's economy will be growing at a moderate rate in the coming years. Among the key constraints, he cited the high cost of credit and persistent labor shortages, which keep business costs high.
Alexey Vedev noted that a budget deficit of 2-2.5% of GDP does not, in itself, pose a serious problem. However, high government debt servicing costs remain a significant burden.
"Maintaining the budget deficit at 2-2.5% of GDP is not a problem. The cost of debt servicing is far more important: OFZ yields currently stand at 15–16.5% per annum. Therefore, reducing borrowing costs will be a key priority. Furthermore, curbing the rise in utility tariffs could support the economy and consumer demand. For instance, limiting tariff increases to no more than 4% per year would make it feasible to stay below the inflation target," said Alexey Vedev.
Alexey Vedev also believes that it will be difficult to maintain the current growth rates of non-oil and gas budget revenues in the medium term. If the economy continues to grow at a rate of approximately 1% per year, revenues from the non-oil and gas sector are likely to stagnate over the next one to two years.