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Russia may face further slowdown of economic growth

January 14, 2013, 10:51 UTC+3

It is unclear what can help Russian economy to speed up

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“Fasten your belts, we are getting ready for a landing,” HSBC chief economist for Russia Alexander Morozov described the current situation in 2013. The economic growth will continue to slow down, most economists polled by the Vedomosti daily expect. The inflation rate will remain high, the net capital flight will be substantial. The current account balance, which reduced by about 20% in 2012, will continue to go down by 30% over the export stagnation and the rouble will become weaker. The growth of investments will continue to slow down, and the consumption will remain the main driver of economy, but the economic growth rate will go down.

In 2013 this downward inertial tendency will persist, unless there is some impetus from inside or outside, chief economist of the Sberbank CIB Yevgeny Gavrilenkov believes. The world economy is about to enter the unpredicted stage, Gavrilenkov believes.

Most polled economists expect that the price of the barrel of oil will be 100–110 dollars, only two of 14 experts believe that this price will be a little bit higher than in 2012 (110.5 dollars), and two of them believe that the price will stabilize at the level of 93–95 dollars.

It is unclear what can help Russian economy to speed up. New budget stimuli, the growth of state investments, including from the national funds or more aggressive forms of institutional environment are needed, Alexei Pogorelov from Credit Suisse contemplates. There are no indicators for the reverse of the inertial trend, Kuznetsov said, “Much is said about the reforms, but even if they occur, the effect will be delayed.” But Russia still has “the advantage of a country falling behind,” as the country witnesses a higher labour productivity thanks to new technologies, he said.

The majority of 14 polled experts expect the GDP growth rate at 3–3.5%, four experts believe that the growth will be lower than three percent and even two percent like in the fourth quarter of 2012. “We began the year with two percent and will end with two percent,” Maxim Oreshkin from VTB Capital does not rule out. For 4–4.5% of GDP growth, a better investment climate and a better work of the institutions is needed. “The top priority of 2013 is the level of tolerance of the government, with which growth rate it is ready to put up with – three or two percent.” Yulia Tseplyayeva from BNP Paribas expects.


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