Diversification of the economy will take extra time

The Ministry of Economic Development and Trade of Russia (MEDT) cannot rule out that the Russian economy may suffer recession in the upcoming fall, as the Head of the Ministry Andrei Belousov said in Blagoveshchensk. The MEDT will suggest measures aimed at stimulating the economy.

As early as late January, the MEDT forecasted a significant acceleration of GDP growth in Russia in H2 2013 through the low base effect late in 2012, growth in exports, as well as the implementation of programs on education, healthcare, investments in the transport infrastructure, and defense procurement.

However, such a rapid acceleration of economic growth rates seems to be unrealistic, given that the Russian economy is approaching the limits of its production capacity, and the contribution of oil prices of energy mineral resources in the economic growth is not so big as it was in 2000–2007.

In our opinion, it would take much more time than it was predicted at the beginning of year to implement structural reforms in the economy, reduce its dependence on raw materials export, and enhance labor productivity to finally enable Russia to take a new course of long-term economic growth.

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