The FBK Economic Club panelists gave an outlook for the Russian economy

“Could the economy be back on track?” This question alongside a number of other issues on the outlook for the Russian economy was in the limelight of the FBK Economic Club meeting final for the year. The panelists unanimously concluded that there is no question about any positive changes in the nearest future.

Sergey Vasilyev, Deputy of the Chair at the Bank for Development and Foreign Economic Affairs (VEB), noted that this country’s economy is currently “trapped within the middle level of its development” which is explained by the transition from the traditional industrial development to the innovation era. Given this shift, the recession could be expected to last for another f years. The only potential driver of positive change, according to Vasilyev, is investment growth.

Current economic environment, according to Oleg Buklemishev, Head of Research Centre for Economic Policy, the Department of Economics of the MSU, is explained mostly by uncertainty. He went on to say that “A viable portion of Russia’s economy which has the ambition and potential for growth lacks understanding of further perspective on a number of issues, including pension reform, competitiveness of the economy, budgetary and monetary policy.” He stressed that there is no question about economic growth unless the economy’s structure is changed.

Nikita Maslennikov, Adviser at the Institute of Contemporary Development, noted that, given current situation, under the best of circumstances, the economy could be expected to grow as little as 2 per cent, and warned against dizziness from progress given such minor progress. He went on to warn that “All positive trends which can be observed in various sectors of economy are short-term in nature and may show a setback as early as in the nearest month”. The Adviser added that we will be seeing a series of events in the nearest future, including elections in the eurozone and the US policy shifts under the new Administration.

Andrei Nechayev, Economist, Former Minister of Economic Affairs, lamented that today’s economic authorities are playing with statistics in an attempt to raise optimism not of the general public, who feel financially stressed under current economic trends, but mostly of business entities. He noted that in order not to lag behind dramatically from developed countries, the economy must grow at least 4 per cent and higher. However, in the absence of effective drivers of economic growth, the economy could not be expected to grow more than 1 per cent.

However, current difficulties could be overcome, Igor Nikolaev, a FBK Partner, Director at FBK Strategic Consultancy Department. For that to happen, given the nature of today’s recession, structural reforms are essential. The lack of structural reforms, given today’s external shocks and existing imbalance of the economy, growth cannot be achieved. The Economist gave a presentation on the detailed assessment on current economic performance, shared projections of the country’s key financial institutions in terms of Russia’s GDP growth. He also described causes and implications of structural crises.

Click here to read the full presentation.(in Russian)

The FBK Economic Club is a unique discussion forum which facilitates expert insights exchange between mass media and renowned economists, politicians and government officials. The Club meetings also feature FBK’s analytical reports.

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