Correction of Data from Ministry of Economic Development Indicates Danger of Economic Recession

Based on the data of the Russian Ministry of Economic Development, the "economic growth rate from 2013-2030 will be 50% lower than proposed in the spring - an average of 2.8% versus 4.3% - and will lag behind the economy worldwide. By 2030, Russia's share of the global GDP will decrease to 3.4%, from 4% in 2012".

In other words, it is proposed that the developmental trend of the Russian economy for the foreseeable future will not change, i.e. it will proceed "on the basis of active modernization of the energy and raw material sectors of the Russian economy, while continuing to remain relatively weak in the non-governmental high and medium technology sectors". Hence, as indicated, the experts deduce that there is no question of any modernization of institutes or buildup in the fundamental factors of economic growth.

To our thinking, the correction in the Ministry predictions once again bears witness not only to the stagnation of the Russian economy, but also the danger of its recession. At the same time, all things considered, radical measures for its prevention should not be expected, given the published prediction data and the growth rate in investment; all the more so, as emphasized by the Minister A. Ulyukayev on Thursday, "the deterioration in the predictions for the social and economic development of Russia to 2030 may delay the achievement of the goals stated in the so-called May orders of President Vladimir Putin".


A review of the predictions of the Ministry of Economic Development adversely aggravates the strained budgetary situation in Russia; recent research /исследование/, conducted by the international workshop for research of budgetary stability of the Institute of Economic Affairs together with the Russian Academy for the National Economy and Public Administration shows that the RF budget gap (the difference between the present value of future expenses of the nation and the present value of its future revenue) will be 8.4% of the present value of the predicted Russian GDP over the long term. Taking into consideration the limitation of energy resources and the aging of the Russian population, and consequentially the colossal burden on the pension system, the stated figures call for further pessimism.


M.V. Kazakova - Ph.D. economics, head of workshop for problems in economic development, deputy head of the international workshop for the research of budget stability