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Russia’s GDP decline may exceed ministry forecast — presidential aide

August 17, 2015, 20:53 UTC+3 VLADIMIR
The GDP may fall 3.5-4% in 2015
1 pages in this article
©  ITAR-TASS/Alexey Filippov

VLADIMIR, August 17. /TASS/. Russia’s GDP decline may equal to 3.5-4% in 2015, which exceeds the forecast by the Economic Development Ministry, Presidential aide Andrei Belousov said on Monday.

"Judging by what was happening in the second quarter I think the decline may be around 3.5-4%," he said.

Earlier Russian Economic Development Minister Alexey Ulyukayev said the economic situation in Russia should get better in the third quarter while GDP drop will not exceed 2.6-2.8% at year-end 2015. However, according to Ulyukayev, the Ministry is most likely to review its macroeconomic forecast for this year as the country’s GDP dropped 4.6% in the second quarter, exceeding forecast /4.4%/. "We most probably will review the whole forecast for 2015, including of GDP though it’s going to be a slight correction," he said.

Belousov said 4% GDP growth is needed for Russian economy to come out of recession. However, "now if we do not change the structure /of the economy - TASS/ we’ll reach 1-2% growth in 2016," he added.

"We have conditions for stabilizing the situation in the third quarter and facing growth, there will be no head-on recovery, it will be different in different sectors while property construction, car sector and railway machinery raise most concern now," Presidential aide said.

According to Belousov, consumption in Russia is stabilizing, which means decline in retail will cease. However, he is "less optimistic" on investment in Russia.

Presidential aide also touched upon the issue of federal budget deficit. "According to our estimates, revenues base of federal budget totals, and will total over the long term, around 16-17% of GDP," he said. At the same time there are revenues, which cannot be reduced: on defense sphere /7% of GDP/ and social policy /5-6%/. "The remaining 5% may be allocated to reduction of dependency on oil and gas revenues but this will mean we will have to reduce financing of education, economy and everything else," he said.

The remaining 5% of GDP is not enough for financing the key budget items, Belousov said, as 2% of GDP is spent on education, science and culture, 4% - on economy while state spending equals to 1%. "We have 5% while we need 7%," he said, adding that Russia should therefore either increase deficit, or cut budget, or increase burden on business.

Presidential aide does consider reasonable to increase progressive personal income tax. "This will not happen till 2019 as a decision was made not to increase tax burden," he said.

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