"We have fallen into serious stagnant hole"

"We have fallen into serious stagnant hole"

Russia's economic situation reminds me of the era of post-war stagnation, Russian Accounts Chamber Chairman Alexei Kudrin said today.

"For the last 10 years we have been living with a growth rate of 1%. Such a long period wasn't the case in Russia even after the Second World War. We have generally fallen into a serious stagnant hole,” TASS cited him as saying.

The Accounts Chamber Chairman recalled that the rate of our economy growth should not be lower than the world average, whereas this year it will grow by 1.6%, which is lower than the official forecast. And this is despite the fact that the oil price for the current year has doubled.

"It turns out that the increase in the oil price, which has always been the driver of our economy, does not even stop the further decline in growth rates," Alexei Kudrin concluded.

The advisor on macroeconomics to the CEO of the 'Opening-Broker' brokerage house, economist Sergey Hestanov, speaking with Vestnik Kavkaza, noted that the current dynamics of oil prices is not enough to have any noticeable impact on economic growth. "The economic growth requires a constantly increasing oil price. Oil helped our economy when it was recovering from the painful process of the USSR collapse. When recovery was complete, further growth required not just high prices, but continuously rising prices, which we saw before 2008 years," he explained.

At the same time, we still have no other growth drivers for the Russian economy. "The amount of investments remain low. There are no internal reserves either. Labor productivity is low, but quite stable. Therefore, we have nowhere to wait for any breakthroughs. We can stay long enough in this situation," Sergey Hestanov recognized.

The vice-rector of the Academy of Labour and Social Relations Alexander Safonov, in turn, recalled that the real driver of economic growth is growing consumption. "Possible consumers are external parties, foreign countries, and then Russia needs to enter new markets with new products or with older products of higher quality and at lower prices. Unfortunately, we have nothing but traditional goods, related to oil, gas, metals, grain and weapons now. Therefore, it remains an open question whether it is possible to develop the economy at the expense of domestic demand, when real incomes of the population decrease, and consumer demand is compressed. Of course, it is impossible, and the government is facing the task of forming a new development strategy," he said.

"If the government relies on domestic consumption, it is necessary to make serious decisions regarding the development of those projects leading to the creation of, first, a large number of jobs, and second, highly paid vacancies," Alexander Safonov noted.

"The main focus should be placed on new technologies, first of all, on the support of medium and small businesses, as they are the platform for new projects," the vice-rector of the Academy of Labour and Social Relations said.