Moscow - The Russian economy is not at risk of falling into a recession, but growth rates will be low for an extended period of time, Economic Development Minister Alexei Ulyukayev believes.
Rosstat on Friday published its first estimate for GDP growth in the second quarter of 2013, showing that year-on-year growth slowed to 1.2 percent. The figure was worse than the Economic Development Ministry expected, and the growth forecast of 2.4 percent for 2013 might now be revised downward, Deputy Economic Development Minister Andrei Klepach told Interfax.
However, the ministry does not see any risk of the economy contracting.
“There is no recession. And there won’t be. Stagnation is probably an appropriate term. Very low rates of growth, this is an institutional, structural, macroeconomic factor. And it is something that we’re going to have to tackle for a very long time,” Ulyukayev said in an interview with national daily Kommersant published on Monday.
“We will now review the forecast for the upcoming three-year budget period and the long-term forecast with in the context of preparing budget strategy to 2030. We will probably have to give a more conservative estimate of future economic growth rates in all of these documents that will take into account the outlook for global growth and our competitiveness,” Ulyukayev said.
He said the competitiveness of the Russian economy is constrained by several factors. “On one hand, we have a huge burden on the part of the pension system. On the other hand, all of our costs related to tariff policy have increased dramatically: costs related to gas supplies, with transportation of goods, the railway, network costs, power supply costs. Finally, we have a very bad correlation between wages and GDP growth. All of this leads to the rapid decline of the competitiveness and financial health of our companies and the economy as a whole. And all this significantly restricts possibilities for cofinancing and investment growth,” Ulyukayev said.
But consumer demand and exports will keep the Russian economy from falling into a recession, the minister believes.
“Net exports can no longer be a powerful driver of economic growth, but they are quite capable of ensuring low, but positive growth rates for many years. Our structural and social matrix can maintain growth rates at a level of about 3%. This is approximately the average expected global growth rate. And without serious changes to the institutional environment, it’s difficult for us to expect that we will grow much more than the rest of the world on average,” Ulyukayev said.
