The World Bank Cuts its 2013 Growth Projection for Russia

The World Bank has revised downward its growth projection for Russia’s national economy in 2013 and 2014.

Thus, according to data released by the World Bank, the GDP growth rate in the Russian Federation in 2013 had been downgraded from 1.8% to 1.3% on the previous period; in 2014, Russia’s economic growth will amount to only 2.2% instead of the previously expected 3.1%.

In the late summer of 2013, RF Minister of Economic Development Alexei Ulyukayev said that the most suitable term to describe the situation in Russia’s economy was stagnation, not recession – contrary to the opinion shared by many experts. In this connection, as early as November 2013 the RF Ministry of Economic Development made adjustments to its economic forecast for the period until 2030, thus turning its previous pessimistic scenario into the realistic scenario. Then the Ministry further slashed its forecasts for Russia’s economic growth.  

In our opinion, the downward revision, by the international financial organizations, of their forecasts as to Russia’s economic growth rate – for 2013 and the foreseeable future – is an ominous sign, because it points to this country’s economy being ‘seriously ill’ – the fact that was also mentioned by RF President Vladimir Putin in his annual Presidential Address to the Federal Assembly on 12 December 2013.

And the downward revision, by the RF Ministry of Economic Development, of its growth forecast should be regarded as the official recognition by the Russian authority that, given the current low level of investment activity, inadequate institutional development and the resulting poor quality of economic growth factors, the prospects for Russia’s short-term economic development leave much to be desired.

M.V. Kazakova – Candidate of Economic Sciences, Head of the Economic Development Department, Deputy Head of the International Department for Budget Sustainability Studies