All signs of stagnation are present now

Previously, the Ministry of Economic Development and Trade of Russia (MEDT) made a forecast of 3.6% growth in GDP for 2013. Later, however, it revised its forecast and stated that growth rates may be even less than 3% this year.

Indeed, there are reasons for doubting about achieving 5% of economic growth rate in Russia in the short-term period, given that all signs of stagnation are present now. It should be noted that, according to our estimates, an overheating trend became visible in the Russian economy as early as 2003. At present, economic growth rates in this country corresponds to potential ones and, as experts repeatedly stated before, positive global energy market trends is no longer as contributable to the Russian GDP growth as it was in the period between 2000 and 2007, during the so-called ‘fertile periods (for example, in 2007, the market-related component of growth accounted for about 6% [¹], with actual growth rates being 8.5% against the previous year).

Thus, the model of Russia’s economy growth which was good for ‘fertile periods’, fails to work in the current situation. Nevertheless, there are chances to reach a target of 5% GDP growth rates, though it would require quite another economic policy, in particular в частности, привлечение investment resources, including such socially important types of economic activity as education, healthcare, and pension system. The point is that the development of the afore listed types of activity is intended to enhance the quality of human capital in Russia, which is the principal source of sustained economic growth, as the experience of developed countries shows. 

Kazakova M.V. – Ph.D. in Economics, Head of Economic Development Department 

[¹] Analysis of structural and market-related components of tax burden in the Russian economy/ Nauchnye trudy, No. 129R / Kazakova M.V., Sinelnikov-Murylev S.G., Kadochnikov P.A. M.: IET 2009. P. 102.