The Existing Growth Factors Can Maintain the Economy Maximum for Three Years

According to Alexei Ulyukaev, on the basis of the results of this year Russian GDP growth rates may exceed the earlier made official forecast (0.5% as compared to the previous year) and amount to 1.1%.

According to experts, the main factor behind that growth is import substitution (as stated in the updated forecast on Russia published today by the Bank of America Merrill Lynch "in a situation of the ruble depreciation the volume of the import decreased for the first time after a long period having predetermined a surge of business activities in industry") and small growth in consumer demand due to the law level of the rate of unemployment (it is to be reminded that according to the Rosstat's data in January-May 2014 the level of the rate of unemployment in Russia amounted to 4.9% of the gainfully employed population).

At the same time, as was already stated the above factors are able to support the Russian economic growth rates at a small positive level (with fluctuations of 1%) within 2-3 years. Taking into account the fact that after the 2008-2009 crisis the Russian economy entered a new, lower phase of the cycle, higher economic growth rates can hardly be expected in the near future. For further revival of growth rates (in the long-term prospect), it is important either to increase the volume of factors of production (labor and capital), or in case of preservation of those factors at the permanent level growth in the aggregate factor productivity as the Solow model of economic growth predicts [1].

Maria Kazakova, PhD (Economics), Deputy Head of the International Department of Budget Stability Research

[1]See, in particular, Solow R.M. (1956) «A Contribution to the Theory of Economic Growth»//Quarterly Journal of Economics 70 (February): pp. 64–94. Reprinted in Stiglitz J.E. and Usawa H., ed. (1969) Readings in the Modern Theory of Economic Growth. Cambridge: MIT Press; Solow R. M. (1957) «Technical Change and the Aggregate Production Function»// The Review of Economics and Statistics, Vol. 39. № 3. pp. 312–320; Solow R. M. (1962) Technical Progress, Capital Formation, and Economic Growth//The American Economic Review Vol. 52, No. 2, Papers and Proceedings of the Seventy-Fourth Annual Meeting of the American Economic Association (May, 1962) (pp. 76–86).