The Ministry of economic development sent the Ministry of Finance the long-term forecast of socio-economic situation in the country before 2035. The trends predicted by analysts, the MAYOR, is not comforting — the next 20 years Russia will face stagnation. However, the forecast considers three scenarios of development of events “basic”, “basic plus” and “target” where the Outlook is much better.
According to the scenario “basic plus”, in 2017, the Russian economy will finally come out of recession. But this good news end. GDP growth in the next 20 years will be extremely low and will stall on average 2% per year, one and a half times lower than global rates. In the past two decades to increase the gross domestic product will be only 1.5 times, which will bring Russia to the poorest countries on the world scale of wealth.
Real incomes will grow slowly, by 1.4% per year. And level 2013 will return only in 2021. Then the pre-crisis level will be an investment, but high growth rates to demonstrate will not be stopping about 3%. Exports will grow more slowly than imports by 2% a year against 4%, and the trade balance will continue to decline.
The price of oil will gradually increase and reach $ 57 per barrel in 2020 and 76.7 $ in 2035. The demographic situation will remain stable. After the failure in 2026-2028 years the working-age population will recover to 68.1 million by 2035.
Despite the fact that the forecast does not look too promising, that’s not the sad. The “baseline” scenario, oil prices in real terms will remain at $ 40 per barrel for all 20 years. However, we cannot say that the economic indicators are very different from the previous scenario. GDP will grow on average by 1.8% per year, and by 2035 the graphics in General will converge in one point — at the level of 1.7%.
Fortunately, the MAYOR and consider the third scenario – the “target”. Or, as it is called “reform.” The previous two options assume that the preservation of the current conditions and differ mainly by oil prices. The “target” scenario, the same growth rate in oil prices as “basic plus”. But due to reforms and the economy’s transition to the investment model of development will occur a rapid influx of domestic investment, raising productivity and income growth.
In 2020 begins the influx of capital, and economic growth in 2019 accelerated to 4% per year. On average with such a turn of events, the GDP will grow by 3.6% per year, which is higher than world average. Among the drivers of economic growth in the MAYOR referred to the increase of their revenues by reducing their costs, improving the business climate, support non-oil exports.
Deputy Chairman of Vnesheconombank and former Deputy economic development Minister Andrei Klepach, who was one of the compilers of the macroeconomic forecast, in an interview with “Vedomosti” said that the recipes out of stagnation known. This structural maneuver in the real sector (investments in infrastructure, technology development) and budget (the shift of expenditures in favor of healthcare, education). But, he said, “while it seems unlikely that this task was on the agenda”.
Statements by officials, mostly, are more optimistic than the baseline projections of the Mayor. So, on 17 October, labor Minister Maxim Topilin said that the return of incomes of Russians to pre-crisis levels is expected by the end of 2018 (and not in 2021, as predicted by the MAYOR). And on October 18 at a meeting on economic issues, President Vladimir Putin announced that the Russian economy is gradually beginning to overcome stagnation.
At the same time, the forecast of the Ministry of Finance, made earlier, also suggests stagnation with GDP growth not higher than 1.5% per year until 2030. However, the Agency noted that “without structural reforms.”
The question arises: if the prospects of the Russian economy depend not on energy prices and structural reforms and transition to innovative rails, and all know what to do, why are considered “conservative” forecasts? In which everything will remain as it is? That is, the economy will languish for 20 years?
The head of a direction “Finance and Economics” Institute of contemporary development Nikita Maslennikov believesthat the forecast of Ministry of economic development fair and is rather a warning than a statement of the inevitable.
The forecast underlines that if the regulatory functions of the state and the absence of steps towards the structural transformation of the economy will remain the status quo, in the inertial case, we get exactly this result.
Of course, be influenced by such factors as the status of external demand, the prices of our commodities and so on. But if you act on the structural agenda and to implement the necessary steps to lift growth restrictions, then you can go to the “target plus”. Given the current circumstances of economic development put quite modest targets.
“SP”: — But does not say whether this forecast is that the government prepare for such scenarios and consider them acceptable?
— First of all, the forecast for the MAYOR demonstrates an understanding of the political leadership of the country, that if you do nothing in terms of structural transformation of our economy and taking it to a new model of development or to do so as it is happening now, according to the principle “one step forward — two steps back”, we get a 20-year stagnation. And this reduction of our positions in the global economy with all the ensuing consequences for the real incomes of the population, GDP per capita and so on.
If, however, to use the budget to create a structure and agenda not just at the level of declarations, and on the level of development of specific solutions, then after a couple of years, these forecasts may be revised. The solution is the same as the pension reform, the reform of intergovernmental relations, promotion of non-oil exports, reducing the share of public sector in the economy, increase the level of small and medium enterprises, reforms of regulatory institutions and so on.
The forecast is a guide to action. We have been talking about the transition to a new economic model. The only question is how fast we will approach this challenging process. 2017 in this sense provides a large enough window of opportunity. If the budget will be adopted in the framework of which was discussed by the government at the meeting on 13 October, it gives a chance for optimizing public spending and not increase taxes to continue the sometimes difficult but inevitable reforms.
It is no coincidence that the forecast for the MAYOR was published just in time for budget discussions for the next three years. Already in 2018-2019 possible structural maneuver of budget expenditures, reducing them by about 1% per year and placing other articles on education, medicine and infrastructure.
“SP”: — Next year will be a turning point?
— It will be decisive from the point of view of how we formed the structural agenda is realistic or declarative. Show what we can do for the beginning of the reform, using the leverage of the budget and what are the opportunities in reducing inflation to 4%. The achievement of the inflation target investments will awaken from their lethargy, and this is the main driving force of future economic growth. But in order that they Wake up, it takes a serious set of measures to improve the business climate, stimulation of competition, reduction of the public sector and so on.
Economist, Chairman of the Institute of dynamic conservatism Andrei Kobyakov considers the forecast the MAYOR is much more critical.
— Judging from the information that is presented in the press, the MAYOR has no idea of what should be done, what strategies to adopt and so on. Even their moderately optimistic scenario does not look anything like accurate because all the figures are taken from the ceiling.
All three scenarios are based on completely inertial approach. Nothing radical should not be, any changes of economic policy are not expected. Process management will be reactive.
“SP”: — what do you mean?
For example, will be a further decline in economic performance — so you’ll sequester the budget. But when budget sequestration on wage growth even out of the question. One of the most controversial provisions of this forecast is that for 20 years the standard of living of the population practically will not grow. Only recently discussed the topic of doubling GDP in 10 years, and now we economic development in its base case scenario predicts that in 20 years almost unchanged wages.
In my opinion, is a disaster. Our Central government Department signs in the inability to engage in economic policy. If South Korea or Singapore at the time relied on the inertial scenario, for example, on the sale of rice, today we haven’t heard about any “economic miracle.” Korea is not throwing the whole world with their mobile phones and cars.
What it came from by itself, this market is all built? Or is it still occurred under state control, developed strategic plans for five and ten years? And in Japan, and Korea were the five – and six-year-olds. In fact, it is a planned economy with elements of market pricing.
Against this background, the forecast for the MAYOR indicates that our economic unit is generally not going to engage in the programming of economic development and washes his hands now. And since the Ministry does not believe that oil prices will rise, from such melancholy predictions.
“SP”: — But there is an optimistic scenario…
— In the best years, in their scenario, economic growth is at 4%. Although there are calculations of the group Glazyev, which show that it is feasible to achieve economic growth of 6-8%. Moreover, the same figures voiced Stolypin club in preparation for its alternative program. The MAYOR of such plans generally do not want to see? If they consider the most favorable scenario of 4% growth by 2035 will begin to fade to 3%, it is difficult to call his ambitious plans.
In these projections is not discussed, what should be the amount of investment they need to implement, what proportion of investment should belong to the state, as carry out promotional policy of the Central Bank as to consider the scheme that the money was not spent on currency speculation, the Central Bank and so on. These are questions of a purely technical nature. But the problem is that the government does not want to admit that their programming has it, including the same Ministry.
I forecast no strategy saw. It’s talking about anything. It is necessary to carry out structural reforms. But tell me specifically what they should be? You for so many years its activities have not even identified a set of priorities for Russia industries. We have not even a territorial development planning. Created the Ministry of the Far East — it doesn’t know what to do. What global plans then we can talk?
The Ministry of economic development has had a long time to produce this strategic program in its bosom, and do not expect that they someone on her will show. In the meantime, even with their optimistic scenario is an empty space.
