Slowdown of Economic Growth Rates Has Become a Deplorable Trend

On November 20, speaking at the plenary meeting of the State Duma E. Nabiullina, Chairman of the Central Bank of Russia said that slowdown of economic growth rates in Russia was of a structural nature. E. Nabiullina noted that a decrease in the growth rates for six quarters running resulted in the fact that growth of 1.5%-2% instead of that of 5%-6% was becoming a new norm.

The Chairman of the Central Bank of Russia said that the slowdown was of a structural nature and related to exhaustion of the recovery growth potential, additional loading of production capacities, expansion of employment and recent growth both in wages and salaries and consumer lending.

Actually, one cannot but agree with the Chairman of the Central Bank of Russia that Russia's low economic growth rates are related to exhaustion of the previous growth model based on a favorable situation on global markets of energy carriers, while for attaining higher GDP growth rates comparable with average rates of the 2000-2007 period the existing production factors (capacities and the workforce) are not sufficient enough.


In the OECD repor t published yesterday, it is stated that a considerable acceleration of Russian GDP growth rates is possible only in case profound reforms are carried out. Until then -- as stated in the report -- "in 2013 the expected growth in GDP of Russia is reduced to 1.5% against the earlier forecasted 2.3%, in 2014 the economy will grow by 2.3% against the previous estimate of 3.6%, while in 2015 growth will amount to 2.9%".


Due to the above, one would like to hope that those concerns stated by E. Nabiullina about the prospects of development of the Russian economy which concerns can also be found in reports on Russia prepared by international organizations will become an additional motive for more resolute actions by the government to strengthen fundamental factors of economic growth (labor, capacities and aggregate factor productivity) and, consequently, create prerequisites for sustained growth rates in the long-term prospect.


М.V. Kazakova, PhD (Economics), Head of the Economic Development Department and Deputy Head of the Budget Stability Research Department