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Russia has got in “a trap of mean incomes”, participants in the Gaidar economic forum says

January 16, 2014, 13:06 UTC+3 World Service) ¶ 16/1 Tass ¶ ¶ Russia has got in “a trap of mean incomes”
Moscow-based newspapers are reporting about the Gaidar economic forum that opened in Moscow on Wednesday
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MOSCOW, January 16. /ITAR-TASS World Service/. Moscow-based newspapers are reporting about the Gaidar economic forum that opened in Moscow on Wednesday. The papers are reporting the opinions of the participants in the forum.

The forum began with demonstrative change in rhetoric, Kommersant daily reported. Prime Minister Dmitry Medvedev acknowledged officially domestic problems as the main reason for slower GDP growth, First Deputy Chair of the Central Bank of Russia Ksenia Yudayeva stated about ‘stagflation’ in economy as the fact, First Deputy Prime Minister Igor Shuvalov agreed de facto with the diagnosis of “a trap of mean incomes” for Russian economy. Secretary General of the Organization for Economic Co-operation and Development (OECD) Jose Angel Gurria’s assessments for Russia were more optimistic that many Russian opinions, the daily noted.

Medvedev’s speech had the highest level of optimism, the daily believes. Meanwhile, he had to agree with President Vladimir Putin’s last December speech on domestic reasons for slower GDP growth rate in 2013: slower production and slower investment accompanied with inflation growth amid stably high oil price. These tendencies resulted from domestic problems, both structural and institutional, the prime minister believes. Among them, he noted “restriction on the manpower price, which is quite high,” and insufficient development of institutions with quite high income level that only increases Russia’s lag in competition behind developing and developed countries. Meanwhile, these problems “do not result from the mistakes of the past,” Medvedev said with confidence.

Minister of Economic Development Aleksey Ulyukayev’s assessment stayed slightly aside from most views voiced at the forum, Kommersant daily noted. He noted that current phenomena are not a crisis, but the transition to another model of economic development.

Vedomosti business daily singled out Medvedev’s and Shuvalov’s statements that Russia is “in a trap of mean incomes.” Cheap work force ended, capabilities for economic growth are exhausted without sharp growth of investment and higher labor productivity. The economy hanged up, Medvedev noted.

Salary growth outstripped labor productivity growth and the share of labor expenses in the GDP volume is about to reach the highest possible level, the daily cited Nikolay Kondrashov from the development centre of the Higher School of Economics as saying. No matter how much the salary is increased, the GDP rate grows weakly over high inclination for import and the export cannot be augmented, he said.

It cannot be stated definitely that Russia had got in a trap of mean incomes, Kondrashov believes. However, the facts point to this tendency, he contemplates, “The first fact that the GDP rate grows very slowly and slightly. The second fact that the country has lost competitiveness in terms of labor cost.”

“The extensive stage of development thanks to cheap manpower and the loading of current capacities is over, we should pass to innovative stage for sustainable growth,” head of the Centre of Macroeconomic Research of the Russian pubic saving bank Sberbank Yuly Tseplyaev noted.


Itar-Tass is not responsible for the material quoted in the press reviews.

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