Prime Minister predicts crisis in Russia amid sanctions and wars
The situation on international markets is worsening because of trade wars and protectionist policies. However, Dmitry Medvedev noted that the Government expects the expansion of the Russian economy until 2024.
The next six-year cycle will be hard for Russian economy - given sanctions and a possible expansion of trade wars and protectionist policies. According to RBС, this was stated by Russia’s Prime Minister Dmitry Medvedev at the meeting.
“We are all aware that it is highly unlikely that the beginning of this six-year cycle will be hard for the Russian economy. We have to take into consideration the situation with international financial and commodity markets, a possible expansion of trade wars and protectionist policies and sanctions measures.” He noted.
In the head of Government’s words, in this context, economic policies shall be structured in a way that it could steadily grow even when possible conditions are not the best. Moreover, we must improve the standard of living of the citizens. Medvedev emphasized that the next 2019 year is going to be an adaptation of decisions made by the Government these days.
“We expect that certain cycles will close during this period, while structural changes that are being launched by us, as well as measures to improve business and investment activity, will help the economy get back on track.” The Prime Minister said.
Data of RF Ministry for Civil Defence was presented by him. It is expected that, from 2021 onwards, the aincreasing annualrate of the economy will be as much as 3%. It can be achieved from sectors with good export capacity. Medvedev believes that these sectors are chemical and food industries and engineering. Additionally, the development of infrastructure and housing will contribute to the growth of the economy.
Russia’s Ministry for Civil Defence also predicts the growth of the economy until 2024 which was referred to earlier by RBС. The Ministry believes that this process is inevitable. The growth is to be seen within the next six years under any scenario. The structural changes consisting of 12 national projects from Vladimir Putin’s decree made in May will contribute to it. Thus, the country's GDP in 2018 will add 1.8%, however then will drop to 1.3% in 2019 in anticipation of the sharp rise in value added tax from 18 to 20%. The economy will boost and reach 2% in 2020 and 3% until 2024.
The conservative scenario implies the slowdown in world economic growth due to the sharp landing of China’s economy. If it really happens, Russia will reduce the growth rate to 1% in 2019; however, the economy will strengthen and boost growth to 3% until 2022.
The Bank of Russia has a slightly different opinion. On September 15, the regulatory authority reviewed its macro forecast for the worse and concluded that in 2019, Russia's GDP will add 1.2-1.7% instead of 1.5-2% as had been expected earlier. In case sanctions are expanded and the situation worsen in the countries that are Russia’s trading partners, Moscow may experience a major recession.
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