A few aspects of economic growth in Russia

This article analyzes the problems of and prospects for economic growth in Russia. In the first decade of the XXI century, Russia showed quickening development, passing ahead of developed countries in terms of economic growth, and showed an annual growth of about five percent in GDP. The main factors contributing to these rates were rising global energy costs and large-scale foreign investment. In the post-crisis period (2010 to 2012), the major driver of economic growth was consumer demand, supported by a significant growth in consumer credit, which was not surprising because of the growing income of the population. All of the factors mentioned above have now been exhausted, and as a result, the growth of GDP in 2013 was only 1.3%, as compared with 3.4% in 2012. The forecast by the Ministry of Economic Development (MED) of the Russian Federation for 2014 is more pessimistic (not exceeding 0.5%). The forecast is based on the consideration of the following circumstances: stagnation in world oil prices, massive outflow of capital, high interest rates on loans, wage restraint, "fiscal rule", sanctions against Russia, problems in the banking sector, as well as other factors. Contrary to expectations, the crisis of2008 to 2009 in Russia neither improved the economy, nor led to a new model of economic development. In subsequent years, previous flaws have been repeated, including a high level of monopolization in key markets, the attitude towards receiving rental income from primary sector companies, the mainly non-monetary nature of Russian inflation, and imbalances in the dynamics of productivity and wages. In turn, long-term underinvestment in the Russian economy and a high degree of depreciation of fixed capital will require the allocation of additional funds for emergency revitalization and overcoming the effects of possible man-made disasters in the coming years. In the current global state of affairs, hopes for a gradual substitution of fuel exports by other means have fallen short. The outlined slowing of the economy requires aggressive actions. According to the authors, it is the state that must provide the initial impetus for investment by means of modernizing reforms and stimulate domestic demand. This is especially important in the circumstances of a possible reduction in external demand and is why the authors’ question ‘what sources and what mechanisms will provide the economic growth in Russia?’ is quite logical. The article pays close attention to the consideration of growth factors such as restructuring the economy, solving the problems of so-called monotowns, overcoming conflicts in the government's economic policy, regional priorities, as well as other factors.

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