GDP Growth in February 2014 Does not Permit to Speak About Breaking of Economic Trends

Andrei Klepach, Deputy Minister of Economic Development said that the results of GDP growth rates in February 2014 exceeded somewhat the expectations of the Ministry of Economic Development. However, in his view, it is premature to make conclusions about the exit of the Russian economy from stagnation.


The thing is that traditionally in the 1st quarter with the seasonal factor taken into account GDP growth virtually amounts to zero and for that reason the results of economic development in the 2nd quarter and the 3rd quarter are more important.

The current state of the Russian economy does not permit so far to forecast exit from stagnation in the foreseeable future. In addition to the above, it is quite likely that negative economic consequences of Crimea's joining Russia -- which consequences are related to worsening of relations with foreign countries, as well as growth in burden on the budget – will outweigh possible advantages of such a joining.

So, the quality of institutes and the investment climate which form sustained economic growth based on fundamental factors cause only pessimism taking into account the existing complicated political situation. It is hard to state that the pursued economic policy does not create prerequisites for promotion and stabilization of economic growth rates.

At present, it is difficult to say whether the breaking point in negative economic trends has taken place and make forecasts about possible exit of the Russian economy from stagnation. Due to the above, in our view, a 2%-2.5% GDP growth in 2014 is unrealistic and reproduction in 2014 of growth of the previous year can be regarded as a good result.

Maria Kazakova, PhD (Economics), Head of the International Department of Budget Stability Research