The drop in oil prices and Western sanctions have led Russia to start looking for new drivers to help grow its economy, move away from commodities dependency towards technologies, and improve the business climate and the country’s profile worldwide. In addition to the action plan for the next six years, which is expected to bring the national economy to growth rates above the global average, the Ministry of Economic Development and the Center for Strategic Research led by Alexey Kudrin are developing a long-term strategy through 2035.
Following the downturn of 2015, when Russia’s GDP contracted by 2.8%, 2016 saw a recovery with a 0.2% growth. Manufacturing added 1.3% after a 0.8% drop in 2015, net capital outflow showed a three-fold reduction to USD 19.2 billion, and inflation slowed down from 12.9% to 5.4%.
For 2017, international experts project the Russian economy to expand by 1.2 to 1.5%, compared to the Ministry of Economic Development’s forecast of a 2% growth.
However, stagnation is something Russia cannot afford, given its commitment to catching up with developed economies and securing its place among global leaders. In late 2016, President Vladimir Putin instructed the Government to develop a comprehensive plan through 2025 to help the Russian economy sustainably grow at a pace above the global average. This effectively means GDP adding between 3% and 3.5% a year.
The comprehensive economic development plan was submitted by Prime Minister Dmitry Medvedev to the President in May. The next stage is discussions with the expert community to shape the final document.
The plan includes measures to improve the business climate, boost the performance of major investment projects, ramp up non-commodity exports, develop small and medium-sized businesses, and make government support for various industries more effective.
Also, Vladimir Putin instructed Alexey Kudrin’s Center for Strategic Research to come up with Russia’s new development strategy from 2018 through 2024 and have it presented by May.
The document expects the national GDP to grow by 29%, real disposable income by 25%, and labour productivity by 30% by 2024, with non-commodity exports almost doubling over the period, Alexey Kudrin told TASS.
There are three key priority areas: people, technologies, and public administration. The plan is to increase education spending by 0.8% of the GDP, healthcare by 0.7%, and infrastructure by 0.8% as well. The country’s critical infrastructure is to be 100% digitised.
These measures will become part of Russia’s Development Strategy through 2035, a longer-term action plan. To ensure public involvement in the effort, the Center for Strategic Research set up a dedicated website at russia2035.ru, and the Ministry of Economic Development launched gasu.gov.ru/strategy-2035, a portal where everyone can propose their ideas to advance the country's development and also get updates about the performance of various agencies and institutions.
Russia aims to develop the digital economy, create and roll out the latest technologies, replace imports, and ramp up hi-tech exports.
This is also part of the Scientific and Technological Development Strategy of Russia through 2035, which was signed off in December 2016.
Previously, the Agency for Strategic Initiatives, in pursuance of the President’s instructions, launched the National Technology Initiative (NTI), aimed at making Russia a technological leader by 2035.
The NTI is expected to identify the new markets and key technologies going forward to match those with a set of measures for development. The markets of the future include smart energy, unmanned aerial and road vehicles and maritime transport, NeuroNet (a hybrid of the human brain and computers), biotechnologies, new medicine, and more. Most of the markets have roadmaps already approved.
The 2017 budget for the NTI’s key projects includes a total of RUB 12.5 billion of disbursements. Over the next three years, financing will reach RUB 28.6 billion.