ALEXEY VEDEV: “THE MINISTRY OF ECONOMIC DEVELOPMENT IMPROVES ITS ECONOMIC GROWTH FORECAST”

The RF Ministry of Economic Development has significantly improved its forecast rate of economic growth. According to the government department, towards the end of this year, Russia’s GDP will gain 3.8% instead of the previously predicted 2.9%. Alexey Vedev, head of the Gaidar Institute’s Financial Studies Department, shared with The Moskovsky Komsomolets his point of view concerning the country’s updated socioeconomic development forecast.

The RF Ministry of Economic Development is convinced that the economy is recovering faster than expected, and that it will reach its pre-crisis level in July. Russia’s year-end GDP will gain 3.8% instead of the previously announced 2.9%. Besides, the RF Ministry of Economic Development raised its forecast consumer inflation threshold from 4.3% to 5%, and reasserted its previous real personal disposable income growth forecast set at 3%.

“It is difficult to say what will happen this year to real personal income. Should inflation jump above its forecast value set by the RF Ministry of Economic Development at 5% and reach 6.2-6.3%, no increase in real personal income by 3% could be possible. After all, real income is income in nominal terms specifically adjusted by inflation,” Alexei Vedev explained.

As for the expected increase in GDP of 3.8%, this figure is quite achievable, for a number of reasons. According to the expert, at present in Russia, domestic demand is growing very rapidly: firstly, citizens save on foreign holidays, preferring domestic resorts; and secondly, they spend much more on goods and services than they did last year, and do not hesitate to take bank loans and get into debt. All this also accelerates consumer prices.