Russia to grow by 1.3-1.8%

Russia to grow by 1.3-1.8%

Russia's Central Bank Governor Elvira Nabiullina said that economic growth of 1.3-1.8 percent is expected for this year.

"The global economy is entering a new cycle of increasing cyber risks that endanger stability of financial systems and economic growth," Nabiullina said, speaking at an annual banking conference in St Petersburg.

She noted at the same time that Russia, which would become more vulnerable to volatility on external markets, needs to stick to the free-floating rouble and proceed with structural reforms to pave the road for economic growth above 2017 levels that are seen at 1.3-1.8 percent.

Nabiullina said Russia needs to "support new technologies" that would have a better protection from cyber risks.

A professor at the department of the stock market and investments at the Higher School of Economics, Alexander Abramov, speaking to Vestnik Kavkaza, noted that Elvira Nabiullina's forecast on Russia's economic growth is quite real. "It's an achievable growth rate for our economy. Sooner or later, any economy that is experiencing a recession starts to recover. Moreover, 1.8% is not enough for restorative growth. Usually it is due to a factor of production reserves," he said.

"Part of the growth is due to the restoration of investment activity, because companies have large cash reserves on the balance sheets and they have the opportunity to convert some of this money into investments. The third reason is a small recovery in consumer activity of the population. Salaries started to grow, so the consumer demand has gradually shifted to growth," Alexander Abramov added.

Advisor on macroeconomics to the CEO of the 'Opening-Broker' brokerage house, economist Sergey Hestanov, also explained the forecast of the head of the Russian Central Bank with the factor of restorative growth. "If economy decreases sharply, then a rebound in the form of growth should be expected after a while. Taking into account the fact that Russia's economy has decreased markedly in 2015-2016, the probability of growth this year is quite large. First, raw materials prices have partially recovered, and second, Russia's economy has partially adapted to the new conditions. So we will see growth of 1-2%. Moreover, Rosstat's data for the first quarter of 2017 show an increase of about 0.5% for 2016, which means that even 2% of growth is highly possible," the economist pointed out.

"On the one hand, any growth is better than a decline, but for us, any growth of less than 3% means stagnation. Formally, this is growth, but people do not feel it. Unfortunately, in the near future, there are no growth factors that can disperse our economy to speeds above 3%," Sergey Hestanov concluded.

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