Vedomosti managed to get acquainted with the updated development scenarios of the Russian economy prepared by the Ministry of economic development. On Tuesday, the scenarios were discussed at the meeting with Prime Minister Dmitry Medvedev.
The previous forecast was released in April, compared with the document of Ministry of economic development worsened the majority of indicators – and in 2016, and the 2017-2019 biennium. Exception – the growth of industrial production and exchange rate, reducing inflation in 2016 (see table).
The following will not
The Ministry of economic development refused in April to a conservative scenario with an average annual oil price of $25. Conservative now named the basic version (the basis for the budget; oil – $40 for the next three years). “What could konzervativna?” – said Minister of economic development Alexei Ulyukayev. A more optimistic scenario – “basic plus” and the target (the average annual oil price of $50-55).
The forecast submitted to the government, confirmed a representative of the Ministry, but did not wish to discuss the content of the document.
Approaches to fiscal policy in the base case, assume no change of economic model, said a Federal official, the Ministry of economic development was based on stability of tax conditions. Tax regime in Russia as a whole reasonable and without need to distort it shouldn’t be said and the speaker. The budget in 2016-2019 for all three variants of the forecast deficit, will have to spend reserves to take within the country and abroad, to privatize. The plans of the Ministry of Finance for three years – reduce the deficit by 1 percentage point per year to 1.2% in 2019.
Elusive inflation
From 2017, the pension will be indexed to inflation last year. The Ministry considers that inflation in 2016 will be 5.8 per cent (April forecast of 6.5%).
By 2017, inflation will be 4.9% and will drop to 4.1% by 2019 Thus, according to the Ministry of economic development, the Central Bank will not reach the goal of 4% inflation by the end of 2017
The Central Bank and the Ministry of Finance mind. When you apply the inflation targeting regime, we need to put the target in all versions of Outlook, according to the opinion of the Central Bank. To take into account the inflation target is necessary – differences in forecasts of the government and the Bank of Russia reduce the credibility of their policies and make it harder to reduce inflation expectations, the Finance Ministry says. (“Vedomosti” familiar with the observations of the Ministry and the regulator.)
The Ministry has overstated the growth rate of the world economy on average by 1 percentage point, continuing the Ministry of Finance, not taken into account the slowdown of China’s economy, unresolved structural problems in the commodity economies and the end of the recovery phase of the cycle in the United States. The set of scenarios does not meet the government rules the development of the forecast, indicates the Finance Ministry proposes to re-target option on the assumptions of the baseline scenario and complement a conservative forecast with the oil price of $30 per barrel. The Central Bank declined to comment. The Finance Ministry did not respond to a request “Vedomosti”.
Will be slower
From a decrease of 0.6% of GDP in 2016, the economy will go to growth to 0.6% in 2017 (the April estimate – 0.8%) and will accelerate to 2.1% in 2019 the projected growth will not exceed 2% of objection to the Ministry of Finance. Investment in fixed capital will be recovered at more moderate rates, suggests the Ministry of economic development: from 0.3% in 2017 (after a decline of 2.7% in 2016 to 3% in 2019 People will continue to Peter out, the real incomes will shrink by 5.6% in 2016 (will Affect the lack of a second indexation of pensions, says the Federal official.) But in 2017 the possible symbolic revenue growth of 0.5%; in 2019 – by 1.3%. Retail trade turnover, after falling 4.6% this year (-2,7% – April forecast) will be a plus (1.1 percent) in 2017 and will grow by 2.5% in 2019.
The target option Russian economy will reach the growth rate is not below average, productivity will increase by 5% by 2019, inflation will drop to 4% by 2018 and will be achieved macroeconomic balance. But it will have to increase investment expenditures of the state, including by temporarily limiting the costs of wages both in the public and private sector, curb the growth of consumption spending and reducing various types of business costs, said the Ministry. Experience suggests that in conditions like this, it is better to stick to a restrained assessment might be a little more cautious than necessary at first glance, commented at the meeting, Medvedev.
The government eslovenos to freeze expenditures 15,787 trillion in each of the three-year plan. Revenues in 2017, the Finance Ministry predicts 12.3 trillion. Officials seek to meet the target deficit of 3.2% and arguing about additional measures of fiscal consolidation. Among them, the increase in excise duties and the introduction of new taxes, increase the tax burden on citizens and companies, additional dividend payments from state-owned companies.
