To fulfill their promises, officials will have to “seriously work hard”
During the XIII Gaidar Forum, Prime Minister Mikhail Mishustin noted that the country’s GDP growth of at least 3% per year will serve as a solid foundation for the development of the Russian economy. Such a bar will become the key to the future well-being of the population and strengthen the financial position of the state. Independent experts are sure that the government’s forecasts are too optimistic: in 2022, economic growth may slow down and officials will have to “hard work” to achieve their goals.
The period of adaptation of the domestic economy to the challenges of the pandemic is over, and now “we need to move on.” According to Mishustin, the government spent a lot of effort to support citizens in the fight against coronavirus, and parents with children and regions received the most support: the credit burden decreased, loans were restructured by 220 billion rubles, and financial resources were provided for infrastructure development.
In turn, the federal budget was executed with a surplus, and in order to coordinate actions to develop the Russian economy, the Cabinet of Ministers developed a unified plan that includes 42 new strategic initiatives, each of which is aimed at improving the well-being of people and strengthening the position of the state on all world economic platforms.
To implement the announced plans of the government, a solid foundation is needed, the creation of which in the Russian economy will be facilitated by an increase in GDP of at least 3% per year. The government-approved strategy for the development of the domestic market for the next 5 years will allow to continue moving in a positive trend. In particular, investments in the development of new microelectronic technologies should increase, large-scale injections into infrastructure are envisaged, including the development of roads linking Russia and China.
Independent financial experts treat the promises of the authorities with great distrust. One of the main factors determining the domestic monetary potential will be the state of the world economy. The likelihood of high international food inflation will remain high, which will negatively affect store prices. The draft federal budget provides for a 2% reduction in spending compared to 2021. According to Finam investment holding analysts, such a tough approach seems too ambitious. Moreover, according to Rinat Fattakhov, vice-president of the Russian Fuel Union, the cost of gasoline in our country jumped 0.4% in the first 10 days of the new year. At the end of last year, the growth of fuel tariffs at filling stations, which largely affect the prices of most everyday goods, outpaced general inflationary trends.
According to Nikita Maslennikov, department director of the Institute of Contemporary Development, the projects proposed by officials as coordinating measures for the development of the domestic economy are purely speculative, and it is not entirely clear how much money will have to be spent on their implementation. The timing of the preparation of government initiatives is also very arbitrary. Stable annual economic growth of 3%, indicated by Mishustin, has long been incorporated into the new financial three-year plan of the Cabinet of Ministers. The forecasts of the independent expert community are limited to an increase of 2.5% to Russia’s GDP, and the most conservative assumptions suggest that this figure will hardly overcome the 1.5% mark due to high inflation and geopolitical risks. “Getting the remaining one and a half to half a percent will not be as easy as it follows from the words of the prime minister. The Russian regions, instead of increasing tax collections, demand record subsidies from the center, and energy prices, while still at a high level, run the risk of significantly sinking and not becoming a guarantee of economic recovery. Therefore, in order to reach the declared level of development of the country’s financial sector, the state profile departments will have to seriously work,” the expert warns.
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