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Economic Development Ministry proposes government two variants for boosting Russia’s economy

April 16, 2012, 13:50 UTC+3
The first one should take the country to the level of its European neighbours, the second one is easy to translate into reality
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MOSCOW, April 16 (Itar-Tass) — Russia’s Economic Development Ministry proposed two scenarios for the country’s macroeconomic development until 2030. The first one should take the country to the level of its European neighbours, but it is painful for the country. The second one is easy to translate into reality, but it will make economy fade out. Moreover, the Economic Development Ministry forecasts new crises in 2017 and 2025.

Energy superpower or great country comfortable for living – the Economic Development Ministry offers such a choice, the Vedomosti business daily wrote. The government that is still led by Prime Minister Vladimir Putin has to choose the priorities for long-term economic policy that will define what a country Russia will be by 2030: energy super power or an economy of knowledge.

A conservative path to development means the strengthening of Russia’s raw material-oriented niche on the world market: the large-scale development of new deposits and energy efficient productions, the import of technologies, the construction of electric power plants and new pipelines. An innovative scenario changes an anchorage of economy – along with modernization of the fuel and energy complex the share of high-tech industries grows. Resources are redistributed in favour of education, healthcare, science, informatisation, machine building and transport infrastructure. By 2030 the share of economy of knowledge, machine building and telecommunications will grow from 11 percent to 20 percent, while the share of the fuel and energy complex will decline from 20 percent to 10 percent.

The forecast is only the first stage in the formation of a long-term economic policy, Deputy Economic Development Minister Andrei Klepach told the daily. It demonstrates on what parameters a budget strategy, state programs, policies in the key sectors of economy and spheres of life will rely, depending on the path taken. “It is expected that on April 26 the government will make some decisions,” Klepach said. In any case the current or new government will have to make this choice, he said. After the feedback from ministries and regions is received, a comprehensive development program will be developed and the work on it will most probably complete by the end of the year.

Russia has two paths, Nezavisimaya Gazeta wrote. The first one is to create a diversified innovative economy. To go along this path Russia has to boost both government and private investments into transport infrastructure and human resources. The spending of the government and businesses on healthcare should grow from 4.6 percent of the GDP in 2010 to 7.1 percent of the GDP in 2030, on education – from 5.2 percent of the GDP in 2010 to 7 percent of the GDP, on science – from 1.2 percent of the GDP to 3 percent of the GDP. This can be compatible with industrialized countries’ parameters. The second path is to keep an energy- and raw material-oriented economy and a dominating role of the fuel and energy complex. However, it would be necessary to cut the spending on transport infrastructure, human resources, defence, public utilities and housing. Russia’s economy will have to rely on imported technologies and knowledge. Under such a scenario Russia’s share in the global GDP will not exceed 3 percent.

“Although it is much more difficult to predict dates of crises than of earthquakes, nevertheless with a certain probability our analysis demonstrates that such a spell of crisis may happen in 2017-2018 or 2018-2019 and respectively the second wave may occur in 2025-2026,” RBK daily citied Andrei Klepach as saying. At the same time he underlined that effects of these two crises will be not of such a large scale as the financial downturn in 2008-2009.

“Such long-term forecasts are very subjective, I would not focus on this,” an expert from the Institute of Energy Strategy, Kirill Bushuyev, said. “In our country there can be only one crisis – a slump in oil prices. It is evident that there is a theory that a crisis occurs once in ten years and under this theory it turns out that the next crisis can be expected in 2018. But it is quite possible that it will not happen. It is very difficult to say in what state our economy will be, it is unclear whether the GDP will decline to 4.2 percent or lower. The question is with what level of the GDP we will approach the crisis. In any case we will make similar preparations as before, i.e. “stabilization fund” and the so-called liquidity cushion.

 

 

 

 

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