Putin’s Economic Directives: Plan or Utopia?

Russian president Putin says he will support OPEC plans for oil | Capital Connection

In Russia, the country’s development strategies are changing, but the state of the economy does not change

The Russian government will focus on fulfilling the wishes of President Vladimir Putin, as outlined in his last message to the Federal Assembly. This was announced yesterday by the new Prime Minister Mikhail Mishustin at a meeting with his predecessor Dmitry Medvedev, media reports..

In his message to the Federal Assembly, Putin, in particular, said that Russia needs to launch a new investment cycle, and the increase in investments, starting from 2020, should be at least 5% per year. Also, according to the president, the share of investments in the country’s GDP needs to be increased from 21% to 25% in 2024. At the same time, Putin conditioned the improvement of the investment climate by the fulfillment of a number of conditions.

The head of the Russian state reiterated the statement that in 2021 the rate of economic growth in Russia should be higher than the world one..

According to the basic forecast of the Ministry of Economic Development, Russian GDP growth should be 1.7% in 2020, then accelerate to 3.1% and 3.2% in 2021 and 2022, respectively. At the same time, the IMF predicts the growth of world GDP by 3.2% by the end of the current year, and in 2020 – by 3.5%.

As noted in an interview with the Russian Service «Voices of America» ex-Minister of Economy of Russia Andrei Nechaev, cautious optimism is inspired by what Mishustin said about the need to revive trust between business and government, reduce pressure on business and institutional reforms. In his opinion, the improvement of the business climate depends on this..

«If real changes take place here, then a tangible increase in investment is quite possible., – he added. – But it is not the first and not the third time that the improvement of the business climate has been talked about, but things have been called so far.».

At the same time, the ex-minister thinks that Russia will achieve the growth of its economy in the parameters set by the president. «only if the global economy plummets». In his opinion, so far there are no grounds for a quick improvement in the situation here..

«What I said about creating a favorable investment climate, so this must first be achieved, – he explained. – And besides, this will not happen tomorrow and will only have an effect in the medium term.».

So there are no serious experts to think that the country’s GDP growth rate will dramatically increase, Andrey Nechaev summed up.

In turn, economic observer Semyon Novoprudsky is sure that in Russia everything depends on the fact, «who and how will count». In the comment «He reminded the Voice of America that last year Rosstat tried to revise the method of counting Russians who live below the official poverty level in order to reduce their percentage.

Putin's Economic Directives: Plan or Utopia?

«The art of counting is quite well developed in our country, – stated the observer. – I believe that these are the methods that will be used to achieve an improvement in the investment picture.».

However, the most unrealistic in Putin’s theses, Semyon Novoprudsky considers the installation to increase the growth of the Russian economy above the world.

«This point seems absolutely fantastic, especially in conditions when there are clearly no signs that (in the Kremlin) they are going to change the political course, which is the main obstacle to growth., – he specified. – By the way, the same goes for investments. Today, in fact, the only strategic investor in the Russian economy is the state, which is trying to finance national or infrastructure projects either from the budget or through state banks and state corporations. However, the effectiveness of these investments, at least last year, was rather low.».

Mishustin, by virtue of his position, is forced to say that the government will fulfill all the plans set by Putin, the journalist claims. According to him, Medvedev also never contradicted the president, but this did not bring any significant results in terms of economic growth and improving the well-being of people..

«The year 2020 has come, until which the former grandiose program of the country’s social development, adopted in November 2008, was calculated., – he stressed. – And none of the stated basic goals was achieved, except for relatively low inflation by Russian standards. And inflation also fell due to the sharp impoverishment of the population and the fall in incomes of citizens over the course of six years. For failure, no one answered and will not answer».

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