International experts have commented on the recent statements made by several Russian officials about some economic recovery in Russia. They say that the weak economic growth isn’t backed by higher standards of living in the Russian Federation.
The mentioned officials claim that the Russian economy has entered a bullish cycle while the recent stats make allow them to hope for overcoming the economic crisis in the near future. However, Russian households still don’t see any improvement in their lives.
It seems like the Russian government does really believe in a better economic future for Russia. They seem to have stopped looking for the bottom for the Russian economic crisis and are now seeking any signs of growth instead. Such signs were found in the 4th quarter of 2016. Back then, they cut the living minimum by 2% all the way down to 9691 rubles. This meant that living in Russia had become cheaper back then. In other words, they claimed to have managed to stabilize the cost of the basic set of products and services, along with curbing inflation. On top of that, the 4th quarter of 2016 showed that he national economy had entered the green zone. According to Rosstat, Russia’s federal statistics office, the Russian GDP gained 0.3% over the reporting period as opposed to the previous one.
Maksim Oreshkin, who is current head of the Russian Ministry of Economy and Development, assumes that the Russian economy has now entered a new phase of growth. The minister claims that if to look at the stats or early 2017, we can see that the cargo transportation turnover has grown by 4-6%, electricity consumption has gained 2%, and so on. At the same time, the business activity index is now around multi-year high and has been there for quite a while.
At the same, the ministry is going to revise the 2017 forecast. They say the forecast is going to be improved drastically – by 200% or so. However, even of this is the case, the GDP won’t get an increase over 2%. However, most of the high-ranking officials in the economic and financial sector assume that if the Russian economy and financial system sees structural reforms, it will fall into the so-called average income trap.
As for international experts, the don’t seem to share the optimism with the mentioned Russian officials. Some of them say that the new stage means a new growth model, which implies almost zero growth potential. This means that going back to growth in such an environment doesn’t actually carry any optimistic figures. At the same time, other experts think that the national economy in a new growth paradigm should rest upon leverage without budget support.
However, this is not confirmed by the latest economic stats. The thing is, that the federal budget spending has been growing at an increased pace since early 2017. Over the first 2 months of the year, it increased by 20%. The question is, how stable such growth will be.
