GDP Decline may be About 3%, Said Prime Minister

GDP Decline may be About 3%, Said Prime Minister

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The year-end GDP decline is expected be about 3%, said the Russian Prime Minister Mikhail Mishustin at a meeting on economic issues. The worst-case scenario, voiced by some experts in the first half of the year did not come true, and no double-digit production decline is expected.

After the start of the special military operation in Ukraine, the collective West unleashed a barrage of sanctions against Russia. At the same time, some analysts assumed that, for this reason, the Russian economy's fall by the end of the year could be measured in double digits. Meanwhile, the data voiced by Mishustin indicate that such a sharp collapse will not happen. Thus, according to Andrei Klepach, chief economist of VEB.RF, quoted by Gazeta.ru, the decline of Russian GDP by the end of this year could be 3.1%.

In addition, Mishustin added that forecasts can be made by applying different options and scenarios for further development of events. When analyzing the state of the economy, the Russian Prime Minister stressed that it is necessary to closely follow the ongoing processes, to take into account that the global crisis may intensify in the future, to analyze the dynamics, taking into account various factors. It is mandatory to take into account sanctions pressure, which affects the economic sectors, especially in cases where it is not possible to smooth these moments at the expense of internal reserves, Mishustin said. Doing such an in-depth analysis it is necessary that the reaction to all this is adequate. According to the Head of the Russian government, it is necessary to clearly “work out solutions and prepare responses,” while analyzing the scenarios that are possible.

In addition, Mishustin said that the country should devaluate the economy and expand international settlements in the Russian national currency. Successful steps in this direction have already been made.

Mishustin clarified, according to media reports, that in order to coordinate budgetary and monetary policies, the new budget rule, which was approved by Russian President Vladimir Putin, should be taken into account. According to this rule, over the next three years, as reported by Interfax, we will be able to direct about 8 trillion rubles ($197.57 bln) in revenues from oil and gas sales to finance our expenditures.

At that the Prime Minister pointed out that it is necessary to stimulate investment activity by all means, using also the mechanisms of state guarantees.

As noted by the head of the government, Russia may have to deal with such a phenomenon as changes in the labor market, and the citizens must be prepared for this and react to it in time. Changes in the labor market will be mainly related to structural restructuring in various sectors of the economy. Continuing to analyze the situation in the Russian economy, Mishustin undelined that at present there is already a shortage of personnel in many areas. That is why the Prime Minister recommended taking specific decisions in time to overcome the negative consequences and ensure market flexibility.

According to Mishustin, as reported by RIA Novosti, many organizations, including the World Bank, IMF, and the Organization for Economic Cooperation and Development, have improved their estimates of the dynamics of the Russian economy.

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