What can revive Russian economy?

What can revive Russian economy?

At the session of the Economic Council's presidium, held on Wednesday, Russian President Vladimir Putin stated that previously existing sources of Russian economic growth have exhausted themselves, and that is why there is a serious issue of finding new sources to replace them.

"I think it is necessary to emphasize once again that economic growth will not resume by itself. Unless we will find new sources of growth, the dynamics of GDP will be somewhere around zero," RIA Novosti quoted him as saying.

Vestnik Kavkaza asked experts what can lead to a new revival of the Russian economy.

Professor of Finance and Banking Faculty of RANHiGS, Sergey Hestanov, agrees with the president. "I absolutely agree with him. Moreover, now it is even possible to say when exactly did the old model of economic growth exhaust itself. It happened approximately in the spring of 2013. Before that, Russian stock indexes fluctuated almost simultaneously with indexes the US, for example. But since the spring of 2013, Russian indexes began the decline, while American indexes continued to rise. It was a moment when major investors, whose capitals mainly cause the growth or, on the contrary, decline in the economy, came to the conclusion that model of growth based on raw materials, on the basis of which Russian economy grew since the early 2000s, with a short break for 2008-2009, has exhausted itself. And the president was absolutely right when he stated that, yes, we need to find a new model," he said.

At the same time the expert complained that today, it is impossible to clearly and definitely answer the question of what can become new sources of economic growth. In other words, there is no consensus in this regard even on the level of theoretical discussions. The main stumbling block lies in in the fact that it is clear to everyone that raw materials model no longer works, and unfortunately, even at the level of theoretical discussions, no one can offer anything in exchange," the economist explained.

Chairman of the Board of the National Currency Association (NCA) Dmitry Piskulov also thinks that "the president was absolutely right when he said that we need to reach normal growth rates." "We had great growth rates in 2000s, about 4-5%. We, of course, did not have growth like in China, but they started from a lower level. Neverless, in order for economy to successfully develop, there should be growth points. Economic growth may come from different sources," he said.

"From my point of view, economic growth is associated with several components. There must be a locomotive that would pull the demand to all other industries, to the products and services of other branches of industry," he thinks.

The head of the Association of Regional Banks and сhairman of the State Duma Committee on Economic Policy Anatoly Aksakov expressed the view that "the demand of the population, which would be primarily exhibited by segments of the population low incomes, like pensioners, public sector workers, librarians, teachers, doctors" can serve as a source of economic growth. "Since these people mostly buy Russian products, it is obvious that if they will buy more of them, more products will be produced," he explained.