The Forecast of the Russian Economy will be Revised
On February 11, the mass media reported that Andrei Klepach, Deputy Minister of Economic Development of the Russian Federation would leave his office to be appointed the Deputy Chairman of the Bank for Foreign Economic Affairs. In our view, Klepach's departure from the Ministry of Economic Development is highly predictable: in present conditions economic development forecasting is a difficult task. Balancing between real trends in economy and forecast declarations of the authorities is becoming more and more complicated.
On the one side, the authorities have more often made declarations of late about the need to increase the economic growth rates by means of a switch over from the old model of economic growth based on motivation of domestic demand and favorable trade conditions (primarily high global oil prices) to the new one based on higher labor efficiency and upgrading of the investment climate and infrastructure.
However, on the other side, a drop in the economic growth rates makes it impossible in the existing conditions to switch over to a new model of economic growth. Late in 2013, the Ministry of Economic Development of the Russian Federation revised the social and economic forecast of development of the Russian Federation by accepting as a base scenario the most pessimistic scenario of development which did not suggest modernization even of the existing source of growth, that is, the oil and gas sector.
With all the factors considered, the forecast of Alexei Ulyukaev, Minister of Economic Development -- the 2014 GDP growth rates within the limits of 2%-2.5% and no recession -- looks rather strange. As early as last year, A. Klepach justly stated that fulfillment of May Decrees of the President appeared a rather complicated objective and imposed a heavy burden on a "shaky" budget system. It is to be noted that that statement by the Deputy Minister was made without taking into account the complicated international situation for Russia which took place early in March.
Also, no wonder that the candidature of "the chief forecaster of the Russian government" has not been approved so far: it is not pleasant to take a responsibility and explain why "good" forecasts failed to materialize and why it is necessary to revise forecasts which were made six months or a quarter ago. A. Klepatch's departure from the Ministry of Economic Development of the Russian Federation points to the fact that the forecast of development of the Russian economy will be revised again and, unfortunately, not for the better.
Maria Kazakova, PhD (Economics), Head of the Economic Development Department and Deputy Head of the International Department of Budget Stability Research