From recession to growth: when the Russians will feel the difference

© Fotolia / Romolo TavaniРост economyFrom recession to growth: when the Russians will feel the difference© Fotolia / Romolo Tavani

What is happening now with the Russian economy, behind the crisis and when the economy will fall into a sustained recovery? The answers to these questions tried to give Vladimir Putin on 15 June during the «Straight line». The country has overcome the recession and moved on to the period of growth, said the President, recognizing, however, the most painful for the population consequences of a protracted crisis — the decline in real income of Russians and the growing number of people below the poverty line.

Objective reality pointed out by the President: economic growth, the population of Russia does not feel too deep was the recession.

Economists point out that we’ll feel it when the stability based on the grown oil prices, will be backed by real measures to stimulate the economy.

A Foundation for future growth

Noting the termination of a recession, the President pointed to a number of objective data. In particular, GDP growth for three consecutive quarters. He recalled that in the fourth quarter of 2016, GDP grew by 0.3% in annual terms in the first quarter of 2017 — 0.5% in annual comparison.

Among other positive factors — increase of industrial production, the volume of non-energy exports and investment in fixed capital. In addition, rising car sales and the volume of issued mortgage loans, which in all economies is a clear evidence of the beginning of growth, the President said.

Meanwhile, Putin added that investment in fixed capital in Russia are growing faster than the economy grows. «The economy grew by 0.7% in the four months of 2017, and investment in fixed capital — by 2.3%. This, according to him, says that «has already done the groundwork for the future.»»Need to knock down the so-called non-monetary inflation — that is, prices and tariffs regulated by the state, — said Yakov Mirkin, head of international capital markets, Institute of world economy and international relations. — The state can do it, but at the same time is now and the great financial freeze by the Central Bank and Ministry of Finance».

Natural, not raw growth

What is happening now in the Russian economy is very dependent on external conditions, therefore, the whole recovery, which began in mid-2016, is the first «merit» of rising prices for oil and gas, explain economists.

One of the main tasks for today — expansion of lending to the economy. As pointed out by Mirkin, is now increasing the volume of lending to the largest semi-public corporations, and loans to small and medium businesses, unfortunately, are declining.

«Besides, if 10 years ago the majority of loans went to the regions, today it falls on Moscow and Moscow region», — he said.

Among other terms of the growth of the expert’s opinion, reduce the tax burden on business, reduce administrative costs, incentives for foreign direct investment and moderately weak ruble.

«Everything must be subordinated to growth and modernization. In this case, the business will breathe freely, and the economy will escape from this cruel dependence on oil prices and volumes of external demand for Russian raw materials» — says Mirkin.

The analyst reiterated that programmes aimed at accelerating economic growth.

«Of course, if implemented will not work, will have to rely only on the cumulative effect of 4-5% growth that will occur in five years,» — said Shabanov.

That offer

According to experts, is quite adequate proposals to stimulate the economy contains the program of the Stolypin club, involving the inclusion of the printing press and giving businesses various preferences, so he could develop, pushing the economy into a green zone.

The concept of «Stolypina» a number of observers think is more «popular» than the program proposed by head of Centre of strategic development Alexey Kudrin.

Convinced Kudrin, the investment must be private, and the conditions for them to create reforms, low inflation and small budget deficits. The former Finance Minister also believes that the need to enhance the flexibility of the labour market, reducing the number of inefficiently employed in the economy. In his opinion, the time has come to reduce the number of pensioners in Russia, raising the retirement age to 63-65 years old.

The main objective of both strategies is to offer recipes that will allow in the foreseeable future the economy to reach annual growth rates above the world average. To choose the path of salvation of the economy, the President has yet.