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Higher growth forecast for Russian economy of 4-6%

Russian economic output will be more than double the official forecasts, according to the Russian Academy of Sciences’ report, which predicts growth of 4-6 percent.

“At the first stage the main task is to ensure economic recovery through a complex of short-term tactical measures triggering production growth and reducing destabilization risks in economic activities (doing business),” the report said, quoted by the TASS news agency.

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“The next stage of economic growth implies an increase in growth rates and step changes at all levels of the economic system, which, according to our estimations make it possible to reach average annual GDP growth of 3.2 to 3.5 percent in 2017-2020, four to six percent in 2021-2030, and 3-3.5% in 2031-2035,” the report said.

As the authors of the report explain, the main driver will be domestic investment demand. The report predicts in three years investment growth will reach 5.7 percent.

“Eliminating those factors that excessively constrain domestic demand will lead us to the desired figures for GDP growth: there is no miracle here, but this will require certain actions in the field of economic policy,” said Aleksandr Shirov, one of the authors of the report.

The official forecast by the Kremlin is far more conservative. The Ministry of Economic Development predicts economic growth will be 2.1 percent in 2017 and 2018 and grow to 2.2 to 2.3 percent in 2019-2020.

According to independent economist Dmitry Miroshnichenko, the growth potential of the Russian economy in the next three years is limited to 1.5 to 2 percent.

“This is a natural background growth – the one that the economy can count on without artificial stimulus measures,” Miroshnichenko told RIA news agency. In his view, the heights predicted in the report are not feasible even if oil costs $140 per barrel.

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