BOFIT Weekly Review 2015/18
Economy ministry puts out ever-rosier forecasts
Over the past two months, the economy ministry has drafted four economic forecasts. The latest draft reduces slightly its expected GDP contraction this year to 2.8 %. One reason for the upbeat revision comes from the ministry’s preliminary first-quarter performance estimate that shows GDP declining only 2.2 % y-o-y. The ministry’s assumption for the average crude oil price this year remains at $50 a barrel. Most forecasts of independent research institutions see Russian GDP contracting about 4 % this year. In a further departure from other forecasters, the economy ministry also expects GDP could grow as much as 2.3 % next year under its scenario of an average oil price of just $60/bbl. In the forecast, annual GDP growth in 2017 and 2018 reaches 2.5 %.
The draft forecast also includes a more optimistic scenario. On request from the president, a target variant of even faster growth has been drafted. In that case, growth would be boosted by targeted infrastructure investments using assets from the National Welfare Fund (up to 80 % of the fund’s assets), as well as assets from pension funds.
The economy ministry has also prepared a draft version of the three-year government action plan. Goals include raising the investment-to-GDP ratio from below 18 % this year to a range of 22−24 % by 2020. GDP growth should reach the average level of growth of the global economy by 2018, which would result from a resurgence in private investment. The draft places relatively heavy emphasis on encouraging private entrepreneurship.