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Russian economy outlook

June 03, 4:37 UTC+3
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  • Russian economy started to grow

“Russia’s GDP is growing for the third consecutive quarter. According to preliminary estimates, the economy grew by 1.4% in April. Car sales and mortgage loans are on the rise. <…> Experts all over the world consider these indicators as important signs of economic recovery. <…> The inflow of foreign direct investment into the Russian economy amounted to USD 7 billion in the first quarter. Notably, this is the best number for the corresponding period in the past three years. Investments during the first quarter were up 2.3% overall,” said Vladimir Putin, President of the Russian Federation.

  • Russia relies on digital technologies as the cornerstone for business and public administration

“Firstly, it is necessary to draft an entirely new, flexible regulatory foundation for introducing digital technology in all areas of life. <…> Secondly, the state will support those companies that bring with them developments and competences in digital technology and have a so-called crossover, intersectoral impact. <…> Thirdly, we will build support infrastructure for the digital economy. <…> Fourthly, we intend to increase many times over the number of graduates specialising in the digital economy. In effect, we will have to resolve a broader task, a task at the national level – to achieve universal digital literacy,” said Vladimir Putin.

  • New mechanisms to raise investments are suggested

“Return on their [investors’] capital investment should be ensured through regular payments that will come from the principal beneficiaries of infrastructure facilities. <…> This is about introducing a kind of an infrastructure mortgage mechanism where an infrastructure project is in effect bought on a loan received from private investors.”

“The term of special investment contracts could be extended from the current 10 years to 20 years with provisions to be made for flexible participation <…> by development institutions, banks, natural monopolies and other agencies. <…> It is also important to extend demand guarantees to products created within the framework of special investment projects on the part of both the state and companies with state participation. <…> It is essential to ensure that tax and other conditions related to state regulation remain unchanged throughout the term of a contract’s implementation,” said Vladimir Putin.

CHALLENGES AND SOLUTIONS:

  • The environmental issue is pressing against the backdrop of the decision coming from Donald Trumps administration to pull out of the Paris climate accords

“We speak out against the exploitation of the environment and want industries to achieve a zero environmental impact,” said Narendra Modi, Prime Minister of India.

“The climate change issue <…> is related not only to the way of treating our planet in the future, but also to our economic interests,” said Christian Kern, Federal Chancellor of Austria.

“I believe there was no need in withdrawing from the Paris climate change agreement since it was a framework convention. <…> Now we need to stop making a fuss about it. Instead, we should create conditions for joint work, since if countries like the US refuse to cooperate at all, there will not be any single treaty agreed on and signed,” said Vladimir Putin.

  • Rolling out innovations gives rise to new risks along with opportunities

“New technologies are rapidly changing our way of life, leading to the rise of new industries and professions and opening up new development opportunities. However, they are also creating new threats,” said Vladimir Putin.

“Digital technology, robotics, internet give us new development opportunities. <…> We should embrace these technologies instead of putting them off and thinking we can make it without them,” said Christian Kern.

  • Economic inequality poses a threat to the development. New technologies and international cooperation will help to address this issue

“It is about making our economy generate more income and raising people’s incomes. This can be done only through the development of new technologies. <…> [In addition,] the state should reallocate resources to support people in need and complicated circumstances,” said Vladimir Putin.

“One should not allow 1% of the society to possess the same amount of wealth as 99% as it destroys stability. Social balance can be ensured through welfare in the first place. It can be achieved by building bridges between countries and developing economic cooperation,” said Christian Kern.

  • Sanctions are harmful to all parties, however, Russia used the situation to improve its competitive position

“We have experienced very negative consequences, the impact has been tangible. According to our estimates, we have lost around 0.3% of our GDP because of it [the introduction of sanctions]. The figure is quite high, and we want to solve this problem as soon as possible,” said Christian Kern.

“These limitations cause us damage, primarily through restricting the activities of our financial institutions and technology transfers. However, there is an upside. Quite a few industries were given impetus,” said Vladimir Putin.

“We will maintain commercial relations and keep on friendly terms with everyone, both the Eastern and the Western partners, but we are not going to unite with someone against someone else. Any sanctions and phobias are counterproductive,” said Igor Dodon, President of the Republic of Moldova.

  • Security matters and anti-terrorism efforts should form the basis for multilateral international cooperation

“The Prime Minister [of India Narendra Modi] has just mentioned the fight against terrorism. Is it not something that should unite us? Should we not join our forces to tackle the security matters related to the spread of weapons of mass destruction? We need to understand what is going on and where it can lead us, and devote joint and timely efforts to prevent tragedies,” added Vladimir Putin.

“People in our countries expect us to guarantee their safety and fight terrorism. It can only be done if we try to find common ground to ensure cooperation between Europe, Russia and all other countries facing this threat,” said Christian Kern.

  • International cooperation is the only way to respond to pressing global challenges; hostile rhetoric is counterproductive

“Russia cannot unilaterally implement the Minsk Agreements. We are ready to facilitate the process, but we cannot do something that is up to Kiev to accomplish.”

“Russia is protecting Syria’s sovereignty rather than President Assad. <…> We do not want Syria to turn into another Libya, Somalia or Afghanistan.”

“This [accusation that Russia meddled in the US elections] is an effort to solve political problems using foreign policy instruments. It is unhealthy and harmful to international relations, global economy, security protection and fight against terrorism.”

“We have many agenda items to unite us. If we focus on that positive side of our cooperation, we will definitely make the world a better place to live in,” said Vladimir Putin.

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