KEY CONCLUSIONS:
- Stability without development leads to stagnation, while development without stability is fraught with risks. We need development founded on stability
“We need to do things that will give us a steady economic growth in the long term, not frightened by the “rewards” coming a little later. <…> We should not try to boost the economic growth pace in the short term at the expense of stability. <…> Everyone understands that growth must only be founded on stability,” said Elvira Nabiullina, Governor, Central Bank of the Russian Federation.
“There is a key for a very harmonious balance. In fact, it is the lack of one that leads to another. So if you are getting growth, then you will have better security, better stability,” said Arundhati Bhattacharya, Chairman of the Board of Directors, State Bank of India.
CHALLENGES:
- Unilateral sanctions affect competition and global trade
“As a result, we see various restrictions in trade and capital flows. <…> By the way, sanctions against Russia and other countries also affect trade processes and, consequently, growth,” said Anton Siluanov, Finance Minister of the Russian Federation.
- Workforce reduction
“Additional expenses on healthcare related to the growing number of people of unemployable age. Consequently, they have fewer opportunities to receive income, they spend less, and so on,” said Anton Siluanov.
- Weak commodity prices
“It was said that weak oil prices <…> would ensure growth and contribution to global GDP, but this never happened, unfortunately, because consumption in many countries contracted. <…> These countries used to finance their consumer spending by exporting commodities,” said Anton Siluanov.
- Low productivity growth rates
“One of the reasons is the effect from quantitative easing. <…> Because of that, capital flew even to sectors where labor productivity was not very high. This restrained growth of overall productivity,” said Elvira Nabiullina.
- Growth of social inequality as a result of technological development
“Automation mostly happens in sectors that employ semi-skilled people. <…> The middle class is eroding in many countries. <…> This leads to inequality and populism,” said Elvira Nabiullina.
- Higher leverage in many countries
"Many countries sustained growth and came out of the crisis through accumulating debt. So, until the debt issues are properly structured and addressed, economic growth will be restricted," said Elvira Nabiullina.
- Tight monetary policy as a growth constraint
"High interest rates hamper sustainable development, since we cannot meet credit obligations," said Oleg Deripaska, President, Member of the Board of Directors, RUSAL.
- Lack of private investment in innovation
"A survey tells us that in Russia only 10% of companies are moving forward in terms of innovation activities. <...> and that is not good enough if we want to have the dynamism and return on productivity that has been so stubbornly refusing to go up," said Kristalina Georgieva, Chief Executive Officer, World Bank Group.
SOLUTIONS:
- Supporting private enterprise
"Private business needs protection. Rules and regulation should be relaxed. This will boost our economy. And not just the economy. It will help us grow in all respects. Even socially," said Oleg Deripaska.
- Economic diversification and greater reliance on private business
"We need new business ideas and greater diversification to export high value-added goods, new technologies and so on, rather than just commodities," said Anton Siluanov.
"We need an economy dominated by private business that will promote innovation and productivity," said Oleg Deripaska.
- Investment in new manufacturing facilities and privatisation
"We need greater investments, primarily in newer and greener facilities that would benefit the private sector. I believe it is high time for privatisation <...>, this will greatly help the private sector," said Oleg Deripaska.
- Inclusivity as a cure for faltering economy
"Inclusivity helps people properly manage their financial resources and live a better and more predictable life,” said Arundhati Bhattacharya.