A report called “Will Russia become another economic miracle?” has been presented at a round-table talk, held by a group of analysts at the MICEX. The report was prepared by the Center for Macroeconomic Analysis and Short-Term Forecasting (CMASTF). The talk was attended by E. Abramova, General Director of the CMASTF, D. Belousov, head of department at the CMASTF, A. Potemkin, President of the MICEX, A. Gerasimov, Head of the MICEX Analysis and Information Division as well as by analysts from 30 Russia’s leading banks and investment companies.
Participants in the round-table talk discussed macroeconomic forecasts, the potential for further growth of the Russian economy and the capitalization of Russian public companies, the future of certain industries and the competitiveness of Russia as a whole.
Presenting his report, D. Belousov, head of department at the CMASTF, mentioned the long-term challenges faced by Russia in different areas:- Macroeconomic challenges: the exhaustion of the potential for intensive development within the existing structure;
- Raw materials: the rapid growth of the capital intensity of the production of natural resources (oil and gas), the decreasing profitability and investment attractiveness of projects;
- Social challenges: the high and stable level of poverty, growing social differentiation, the emergence of “sustainable poverty”, the degradation of the human capital;
- Demographic challenges: aging of the population and the future rapid growth of the number of pensioners in the country; the emergence of immigration-related problems;
- Technological challenges: the beginning of a new long-term phase in the development of technologies in developed countries combined with the transfer of modern high technologies to countries emerging as industrialized nations, which is likely to increase competition.
In the long-term term, the above-mentioned problems may cause a considerable slowdown of Russia’s economic growth (to 3-4% a year), stable and high inflation, and the emergence of areas of social failure. However, the minimal economic growth that Russia needs is 5 to 5.5% a year.
According to the CMASTF, to solve these problems, the Government must pursue a long-term policy of developing the country’s competitiveness, which includes:- transition to the strategic management of development, which implies the use of additional sources of economic growth;
- the capitalization of competitive advantages: from easily realizable ones (energy potential, transit potential) to those which are more difficult to realize (hi-tech potential);
- the spread of the growth effect to mass industries on the basis of their modernization through technological transfer, the widening of domestic demand, the improvement of investment attractiveness of manufacturing sectors.
- formulate the priorities of long-term development;
- secure interaction among the state, business and regions on the basis of business-state partnership, technological foresight, etc.;
- change over to the project-based logic of development management (lifting infrastructure, technological, personnel and other restrictions);
- formulate Russia’s strategic negotiating position in interaction with the outside world.
D. Belousov noted that the country’s further economic development includes two stages:
In the first stage, due to possible restrictions (the strained balance of payment), main efforts will be focused on the implementation of capital-intensive infrastructure projects securing the growth of production and export of raw materials and hydrocarbons as well as on the creation of appropriate institutional conditions (technological foresight, etc.) and the technological potential for the innovation and technological breakthrough in the second half of the ten-year period.
In the second stage, beginning from 2014-2015, on the basis of the results achieved in the first stage, it will be possible to intensify the manufacturing and export of Russian high-tech and mid-tech products and form the “second pillar of development” of the Russian economy.
In the course of discussion, participants in the round-table talk -- professional analysts representing leading market players -- expressed their unanimous opinion about the necessity of ensuring effective interaction between the business community and the state and using the stock market mechanisms to promote venture investing and innovation-driven development of the economy. They also expressed their support for the wider use of the MICEX stock indexes in macroeconomic forecasting.
Find more information on the report on the web site of the CMASTF: a href="http://www.forecast.ru/">http://www.forecast.ru/
Center for Macroeconomic Analysis and Short-term Forecasting
