Economic Growth Rates in 2014 May Amount to 2% of GDP

On November 8, the Board of Directors of the Bank of Russia approved new amendments to the draft guidelines for the monetary policy till 2016.

The previous draft was based on the mid-term macro-forecast by the Ministry of Economy; it was characterized by overestimated expectations as regards the GDP dynamics. So, according to the forecasts of the Ministry of Economic Development of the Russian Federation if the year 2013 happened to be somewhat unlucky to the Russian economy, from 2014 the country will manage to return to the previous economic growth path, that is, GDP growth of 3% and more.

However, the year 2013 is not an exception from the rules, but our new reality which reflects a low economic activity and unsatisfactory business climate. Due to the above factors, in 2014 lower GDP growth rates - 1.8% to 2% -- can be expected.


Analysts of the Central Bank of Russia are less optimistic, too, so they presented their conservative forecasts under which a moderately tough monetary policy was to be pursued. In that scenario, the economy is not stimulated by means of the monetary policy. The main emphasis is made on the inflation growth rates. However, in a situation of low economic activity the inflation can be combated, but to the detriment of economic growth.


In 2015, the main mid-term priorities of the monetary policy of the Central Bank of Russia will still include stable prices and a completion of the switch-over to the inflation targeting regime. However, in terms of institutional aspects the Russian economy is not prepared yet to the inflation targeting policy which involves a transfer to the floating exchange rate of the ruble.


Excessive volatility of the RUR exchange rate may have a negative effect primarily on the manufacturing industry whose investment plans are most affected by volatility of the ruble (as for business planning some predictability is required), rather than the weak RUR exchange rate.


А.L. Vedev, Director of the Structural Research Center