UPDATE: PM sees next 6 yrs in Russian economy uneasy due to sanctions

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MOSCOW, Sep 20 (PRIME) -- The next six-year cycle in the Russian economy will be uneasy amid sanctions, possible expansion of trade wars and protectionism, Prime Minister Dmitry Medvedev said Thursday at a government meeting.

“We all understand that the start of this six-year cycle will unlikely be easy. We should take into consideration the situation on the commodities and financial markets, as well as possible expansion of trade wars and the strengthening of protectionism and sanctions pressure,” he said.

Russia will build its economic policy in a way “to confidently develop in such, frankly speaking, not very favorable conditions, and, secondly, to ensure stable increase of the quality of life,” he said.

Next year will be adaptive to those decisions that are currently being made by the government, while a new package of structural changes will be able to bring the economy to a higher trajectory, Medvedev said.

“On the whole, as it is expected, next year will be an adaptation to those decisions that we currently make. We expect that certain cycles will end in this period, and this period will end, while a package of structural changes, which we launch, as well as measures to raise business investment activity, will be able to bring the economy to a higher trajectory,” he said.

The Economic Development Ministry expects that starting from 2021, annual growth of the Russian economy will exceed 3%, Medvedev said. “First of all, thanks to industries that have a good export potential – these are the chemicals and food industry, machine building, as well as thanks to development of infrastructure and housing construction,” he said.

“Under forecasts of the Economic Development Ministry, real incomes will also stably grow, inflation is to remain within the target figure of around 4%, and the situation on the labor market will be quite favorable.”

Russia will continue a policy of import substitution in the sphere of investment and consumer goods, Medvedev also said.

Russia will fully restore financial protection of the budget from external shocks in 2019, and the volume of the National Wealth Fund will reach its historic highs, Medvedev said.

“Next year, we will fully restore financial protection of the budget from external shocks, which helped us both during the first, 2008–2009 global crisis and in 2014, when the second wave of the crisis began and we faced sanctions pressure. We expect that by the end of next year the volume of the National Wealth Fund will again reach its maximum in the history of its existence,” he said.

The fund will be raised through the budget rule, under which excessive oil revenues are allocated not for current expenditures, but for reserves, Medvedev said.

Under a draft budget, the National Wealth Fund is expected at 3.818 trillion rubles as of late 2018, 7.809 trillion rubles as of late 2019, 11.37 trillion rubles as of late 2020, and 14.181 trillion rubles as of late 2021.

(67.0098 rubles – U.S. $1)

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