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Russia's GDP growth could reach 3% by 2020 — minister

April 13, 15:30 UTC+3 GORKI

The Rusian economic development minister says inflation will decline more quickly with the current ruble exchange rate

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© Sergei Konkov/TASS

GORKI, April 13. /TASS/. Russia’s GDP growth by 2020 might exceed 3% in the target (positive) scenario, Minister of Economic Development Maxim Oreshkin said at a government meeting.

"In the target (positive) scenario, we expect more positive dynamics in regard to the number of employed people, more active growth of investment activity and aggregate factor productivity. As a result, in the framework of the target scenario, we expect to see acceleration of economic growth rates above 3% by 2020," the Minister said.

"The forecast includes the continuing trend of recent years for further slowdown of the global economic growth from 3.1% in 2017 to 2.8% by 2020," Oreshkin said.

Oreshkin also said that investment demand in Russia in 2017 will be restored because the effect of the macroeconomic situation’s uncertainty - the main factor restraining investment activity - is significantly weakening. "This year, growth of investments in fixed assets is projected to increase by 2%, while private sector investments will be covered by its own funds," he said.

The Minister said earlier that the Economic Development Ministry has prepared the forecast of Russia’s socio-economic development until 2020 in conservative, basic and target versions. The conservative scenario is based on the price of Urals oil at $40 per barrel.

"Taking into account that world oil reserves remain at a high level and intensive growth of shale oil production in the US, we are lay down $40 per barrel price of Urals oil in our conservative scenario, in future this price will grow to the level of inflation in the United States," Oreshkin said.

The forecast takes into account the trend for further decline in the growth rates of the world economy. "The forecast includes the continuing trend of recent years for further slowdown of the global economic growth from 3.1% in 2017 to 2.8% by 2020," the Minister added.

"This year, growth of investments in fixed assets is projected to increase by 2%, while private sector investments will be covered by its own funds," he said.

 The ruble exchange rate will drop to 68 rubles per dollar in 2017, if oil prices drop to $40 per barrel, he said.

"Under the baseline scenario, we expect inflation to slow down at 3.8% at the same time with the ruble weakening against the dollar at 68 rubles if oil prices decline to $40 per barrel. We expect the ruble to be weaken to around 62 rubles, if oil prices remain at the current level," Oreshkin said.

Inflation will decline more quickly with the current ruble exchange rate, while the economy will grow slower, he went on.

"We consider serious toughening of monetary conditions in combining real interest rates growth and serious ruble appreciation to be one of the risks for economic growth in the current year. According to our estimates, if the current conditions remain that can lead to a slowdown in economic growth by the middle of the year, and the inflation rate will fall below 3%, by the end of the year," the minister said.

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