Low investment activity hinders acceleration of Russia’s economic growth – experts

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MOSCOW, February 25. /TASS/. Low investment activity of business is holding back growth in the Russian economy, according to the report on the economic situation in Russia, prepared by experts of the Russian Presidential Academy of National Economy and Public Administration (RANEPA) in cooperation with the Gaidar Institute.

“The recent decisions of international rating agencies that are favorable for Russia are based primarily on the macroeconomic indicators it demonstrates. Judging by the President’s State of the Nation Address to the Federal Assembly, the goal of preventing it from deteriorating is still considered one of the most urgent. However solving another vital task – growth at the expense of growth of investment – raises many more questions,” the report said.

This is due to the weak investment activity of the business, the experts wrote, noting that therefore, sharp reaction of the business to events around Baring Vostok investment fund is understandable.

At the same time, the price of both improvements and deterioration of the quality of the internal business climate only grows as traditional for Russia external sources of income for objective (market, technology) or subjective (geopolitical) reasons are under increasing pressure.

“Thus, the EU and the United States ultimately succeeded in making Nord Stream 2 operating on very unfavorable conditions for Gazprom, which will now make it even harder to conduct inevitable talks on transit with Ukraine,” experts concluded.

Russia’s GDP growth in 2019 could reach 1.7-2%, which is higher than the forecast by the Ministry of Economic Development – 1.3%, according to the report on the economic situation in Russia, prepared by experts.

According to the report since cyclical growth can be considered fairly stable, a serious external and internal negative shock could lead to a slowdown. “In the absence of such negative shocks for the conjuncture or structural component, GDP growth in 2019 will be, according to our estimates, in the range of 1.7-2%,” the report said.

According to preliminary data from the Russian State Statistics Service (Rosstat), the country’s GDP in 2018 grew by 2.3%, which is the fastest growth rate since 2012. At the same time, according to the Ministry of Economic Development GDP growth in 2019 will reach 1-1.3%.

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