Survey: economists not convinced by Kremlin’s predicted ‘surge’ in Russian economy

The miraculous economic “surge” that the Russian government predicts will start in the 2020s and bring Russia into the world’s top 5 economies remains a chimera in the eyes of most economists, writes.

A survey of professional economic forecasters conducted by the Moscow-based Higher School of Economics at the end of April, involving 11 Russian and foreign investment banks, seven analysis centers, two institutes of the Russian Academy of Sciences and major corporations such as Lukoil and Kamaz, showed that absolutely no one believes the economy’s growth rate will exceed 3% in the next 6 years.

Of the 24 participants in the study, only one expert predicted a 3% growth rate, and only after the next electoral cycle in 2025.

According to the consensus prediction, the Russian economy will grow by 1.3% this year, 1.7% next year, and by no more than 1.8-2% until 2024. Compared to a similar survey conducted in February, the experts’ expectations have worsened by 0.2%.

The majority of experts expect that the price of oil will remain relatively stable ($65-67 per barrel of Urals) and the ruble will depreciate gradually, by an average of 1 ruble to the dollar each year.

This is radically different to the assessment by the Russian Ministry of Economic Development (MED), which serves as the basis of all economic and budgetary projections for the next six years. The ministry believes that in 2021 the economy will double its annual growth rate to 3.1%, and even 3.3% by 2024. This will be assisted by 25 trillion rubles worth of national projects, which will be financed through tax hikes and the savings from raising the retirement age.

The MED predicts that the breakthrough will take place amid falling oil prices, with the barrel price of Urals falling from $72 this year to $59.7 in 2020 and $53.5 by 2024. Despite this, the official prediction is that the ruble-dollar exchange rate will remain stable around 65.1 rubles per dollar this year and 66.2 by 2022.

The only thing that the economists and the MED agree on is that the Russian economy has slowed down drastically this year, with the GDP growing by only 1.3%. The growth in excess of 3% that the government is promising seems like a “pipe dream” to most economists, the authors of the study conclude.

  Kremlin, Russia, Moscow