REGIONAL REPORT
Automotive manufacturing in Russia ( Shutterstock . com ).
Many of Russia ’ s key trading partners are operating under strict lockdown because of high infection rates
the past two decades , as well as the potential for GVCs ( global value chains ) to drive future economic growth .
“ There are opportunities to drive Russia ’ s long-term economic growth , by deepening and expanding Russia ’ s participation in manufacturing and services global value chains ,” said Renaud Seligmann , the World Bank country director in Russia . “ In turn , these opportunities could help promote Russia ’ s National Goals aimed at developing exports of high-tech manufactured and agricultural goods , creating jobs in these sectors , and speeding up Russia ’ s technological development .”
Russia needs to position itself within the context of the changes in GVCs that were already under way and were accelerated by the COVID-19 pandemic such as mega-trends towards automation , digitalisation and obstacles to free trade . In this context , the report has developed several policy recommendations to overcome constraints towards furthering Russia ’ s integration into GVCs . These include trade policy reforms to reduce trade costs and promote participation and upgrading in GVCs ; measures to enhance the role of domestic and traded services in the economy and facilitating foreign direct investments and spill-overs through improved institutional and regulatory quality , as well as reduced restrictions .
FocusEconomics panellists project Russian GDP to rebound and grow 3.1 % in 2021 . In 2022 , growth is seen slowing to 2.3 %. economy has more momentum means that there ’ s upside risk to this forecast . That being said , I think I want to make a few things very clear . Our forecast is conditional on an effective vaccine rollout and it ’ s conditional on a substantial part of the adult population being vaccinated by the summer in Russia and in many of Russia ’ s trading partners . Vaccination rollouts are ongoing . The pace is accelerating , but this pace needs to accelerate even more to reach some of those targets ,” he added .
However , he pointed out that many of Russia ’ s key trading partners are operating under strict lockdown because of high infection rates . New variants are appearing in various parts of the world , he said , and there are questions about vaccine rollouts . The economic situation in Russia remains fragile , he added , and authorities should stand ready to provide budget support if the economy were to deteriorate again .
The third issue is inflation . Inflation has been running stronger than projected but , in the IMF ’ s view , much of this is a temporary effect ( one-off effects from global food prices and rouble depreciation ). IMF Executive Directors generally saw merit in the ‘ waitand-see approach ’ of Russia ’ s central bank . The banks in Russia entered the crisis in a strong position . The IMF believes that bank capital for the system is more than sufficient to absorb any losses .
Miniane praised Russian authorities ’ strong policy response to COVID-19 , highlighting the fiscal monetary and banking sector response to the crisis .
“ However , the pandemic crisis should not make us forget that Russia entered the crisis with very weak growth . Real incomes , per capita incomes in Russia , are growing very slowly and are not converging to the levels of richer countries . So , there is a need to accelerate growth . And this means tackling the structural bottlenecks of the Russian economy - weak infrastructure , improving the business environment , improving governance and the rule of law . All these things are going to be key ,” he explained . n
St Basil ’ s cathedral in Moscow , Russia .
A wide view
In the IMF ’ s ‘ Russia 2020 Article IV Consultation press briefing ’, on 9 February 2021 , Jacques Miniane , ( Mission Chief for Russia , IMF ) had the following comments on Russian economy forecasts .
“ The [ Russian ] economy has shown more momentum and resilience than we expected . There was a contraction of 3.1 % contraction in 2020 , which is less than the -3.6 per cent we projected . What the data indicated is that , in the fourth quarter , the economy continued to grow and did not contract as we had projected . So , again , more momentum and more resilience than we expected . And when you look at the first quarter 2021 , so far things seem to be going OK , which is also positive .
“ Looking into 2021 , we have forecast three per cent growth . If anything , the fact that the fourth quarter was better and that the
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