The Uncertainty of Economic Policy in Russia: What Awaits Us in the Near Future?

 
17.12.2014
 
Department of Economics
 
Birgit Hansl, Sergey Ulatov (World Bank)

Birgit Hansl and Sergey Ulatov delivered the World Bank’s regular report on the Russian economy in the EUSP’s Gold Hall. The report was primarily concerned with the uncertainty of economic policy in Russia.

The World Bank experts pointed out that the Russian economy is still in a state of stagnation. In 2014, growth forecasts for the next few years have become relatively more pessimistic when compared with similar forecasts from last year. Among the main reasons named in causing the slow, even nonexistent, growth of the Russian GDP were the low rate of growth of consumer spending and the negative growth in investments. This has arisen as a consequence of the increased costs of attracting foreign investment to the Russian economy.

Birgit Hansl also drew attention to the direct effect of sanctions, under which Russian manufacturers are currently suffering. Companies are faced with the difficulty of attracting additional capital and access to foreign markets. Even within the country, the possibilities for replacing reduced imports are substantially limited. The primary problem is the uncertainty of the Russian government’s future economic policy.

Lastly, forecasts for GDP, poverty levels, and several other indicators drawn from possible economic policy scenarios were presented. Overall, the World Bank experts painted a rather bleak picture of the country’s near future if the government of the Russian Federation continues to provoke foreign partners to introduce new or maintain existing sanctions.

Alena Skolkovo