VEB Deputy CEO: Russia’s GDP may grow 4% per year

MOSCOW, Dec 19 (PRIME) – The gross domestic product (GDP) may grow by 4% per year or even higher in the mid-term if Russia increases investment, Alexei Klepach, a deputy chairman and chief economist of state development bank Vnesheconombank (VEB), told reporters on Monday.

“Basing on conservative forecasts, we will live through rather stable (oil prices) around U.S. $50–60 per barrel. Still, the Russian economy can to increase growth significantly,” he said.

“We expect (the GDP to grow) 0.7–1% next year…But we are able to develop with a growth of 3–3.5%, or even 4% plus, in the mid- and long-term. But with the help of other factors, closely connected to higher capital efficiency and a drastic increase of investment.”

Investment should be increased in education, healthcare, science, technologies, and transport infrastructure in the first place, which could produce a combined additional 1.5–1.8% GDP growth. Russia also can increase its rate of capital accumulation to 26% and even 28% of GDP from the current 20%, which will help it use internal and external resources for development of transport infrastructure, he said.

Consistent oil prices in 2017 may be higher than the $40 per barrel envisaged by the budget, and the government may not spend the entire Reserve Fund in the year. It may develop a new and strict budget rule, and increase its reserves from 2019, but it also can invest these funds and even increase imports in order to make the country more attractive for investment, he said.

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