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Former Finance Minister Kudrin says Russia's GDP to decline by 4% in 2015

June 03, 2015, 14:12 UTC+3 MOSCOW
Kudrin said that the current economic model, which was based on oil revenues and allowed to increase consumption without seriously improving production technologies, has exhausted itself
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© TASS/Artiom Geodakyan

MOSCOW, June 3. / TASS /. The former Russian Finance Minister and the head of the Civic Initiatives Committee think-tank Aleksei Kudrin said that the fall of the Russian economy this year will amount to roughly 4%, he said Wednesday speaking at the Federation Council.

"The Ministry of Economic Development expects this year's GDP to decline by 2.8%. I think the fall will be deeper - roughly 4%," he said.

Thus, according to Kudrin the Russian economy is in a full-fledged crisis "in all existing parameters."

Investments in fixed assets this year are falling almost like in the time of crisis in 2009, the real effective ruble exchange rate is now down by about 15%, "it is three times worse than in 2009," Kudrin said.

Besides that, about 500,000 people can lose their job in Russia during the crisis.

Speaking about the negative factors that affect the Russian economy, Kudrin noted that the sanctions factor "takes away 1% to 2% from the GDP."

In general, according to him, another factor affecting the low rate of economic growth in Russia besides sanctions is the lack of structural reforms and low oil prices.

Kudrin said that the current economic model, which was based on oil revenues and allowed to increase consumption without seriously improving production technologies, has exhausted itself and needs to change.

According to Kudrin, it is necessary to reduce defense spending and to increase investment in human capital - spending on education, science and healthcare.

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