Minister still hopes for Russia’s GDP growth of 0.7% in 2016

MOSCOW, Mar 16 (PRIME) -- Russia’s gross domestic product (GDP) may still grow 0.7% in 2016 in line with the current ministry’s forecast, Economic Development Minister Alexei Ulyukayev said Wednesday at a meeting of the State Duma, the parliament’s lower house.

“I want to reiterate that in the current forecast (for 2016) we assume that GDP will grow 0.7%. This is possible to achieve this year,” he said, adding that the negative trend in GDP and industrial output may be broken already in April–June.

“I think the second quarter will demonstrate positive growth estimates not only of industrial output, but also of gross domestic product. But great risks still remain, and these risks are mainly connected with a restrained consumer demand of households,” which is based on high inflation, low increase of nominal wages and restrictions in consumer crediting, he said.

And from 2017 Russia’s GDP may start to increase by 1.5–2.5% per year thanks to higher state and private investments, lower private capital outflow and inflation, and rising real disposable incomes and retail trade turnover, Ulyukayev said.

Russia’s economy has adapted to shocks in oil prices, as annual inflation contracted to below 8%, the central bank’s key rate is also decreasing and GDP dynamics has remained within a minus 0.1%–plus 0.1% range, he said.

“We have survived the first oil shock with a very deep devaluation of the national currency…in addition to a more than doubled inflation growth, to the central bank’s…increase of the key rate to 17%, and we have also endured a fall in production of about minus 4% of GDP. But the second oil shock resulted in an insignificant devaluation, while inflation is falling instead of growing,” he said.

The Russian economy is expected to continue costs cutting initiated in 2015. Last year, the government’s actions to prompt cost cuts in the national economy resulted in a 53% combined increase of financial results of companies, he said.

Ulyukayev also said that the strategy for Russia’s social and economic development until 2030 should be submitted to the government and worked out by December 2017 to come in force in 2018.

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