Russia Slashes Growth Forecast Through 2030
The Russian economy ministry on Thursday significantly cut the country's growth forecast through 2030 due to falling investment and exports as well as an expected slowdown in retail trade.
Economy Minister Alexei Ulyukayev's announcement came just two weeks after Russia reported a disappointing 1.2-percent third-quarter growth figure that meant the economy would have a tough time expanding beyond two percent in 2013.
"The average rise in the gross domestic product will range between 2.5 and 3.0 percent until 2025," Ulyukayev told reporters.
He further cautioned that "there will be a certain drop-off in the last five years starting in 2026" that mean that the average rise in gross domestic product through 2030 should reach about 2.5 percent.
"But this is linked to our overall assessment of the global economy," he said.
The economy minister this spring had expected annual growth in the period to average between 4.0 and 4.2 percent.
Ulyukayev also warned that Russia will now have a tougher time fulfilling the massive spending promises that President Vladimir Putin made when he assumed his third term in office in May 2012.
The reduced expectations deal a political blow to Putin and his recently reshuffled economic team.
Russia enjoyed a boom during Putin's first two terms in power between 2000 and 2008 thanks to soaring prices for the country's energy and commodity exports.
Annual growth then averaged at more than seven percent and Putin had hoped to achieve five-percent expansion in 2013 that was meant to mark Russia's return from the 2008-2009 global economic crisis.
But analysts note that Russia had failed to make the necessary investments in the non-energy sector that could have helped it achieve sustainability and become inured to global oil price swingings.
Russia has also suffered from persistent capital outflows and low rates of investments linked to the business community's refusal to trust the independence of the courts.
Ulyukayev said he expected capital investments in the period to fall to 4.3 percent from the 4.7 percent envisioned at the start of the year.
Source: Agence France Presse
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