11/29/2021, 09.42
RUSSIA
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Forecasts of continued stagnation for Russia's economy

by Vladimir Rozanskij

The majority of businesses do not trust the state. Widespread corruption, bureaucracy, government control and inefficient judicial system are the main problems. In the coming years annual GDP growth is expected to be below the 3% set by the government.

Moscow (AsiaNews) - In Russia, the majority of businesses do not trust the state, doubt the judicial system and do not believe in the "leaps" of economic growth, announced with emphasis by the authorities as "higher than the world average."

This is the data collected by the local branch of the consulting firm PwC (PricewaterhouseCoopers), based on a survey conducted in October and November among more than a thousand executives of Russian companies, from the largest to the smallest, published by finanz.ru.

In 2018, President Vladimir Putin had announced an ambitious package of national projects with the aim of resurfacing the economy from stagnation, defeating poverty and achieving an impetuous development of the production sector.

Putin intended in this way to react to the worst economic contraction of his time in power, burdened in recent years by economic sanctions following the conflict with Ukraine, and to the effects of the global economic crisis. So far, however, very few results have been seen, partly due to pandemic restrictions.

Responses from business leaders "are mostly the same as they were three years ago," notes Russian PwC director Igor Lotakov. Even though the trade balance has grown by 35-40%, the majority of respondents still lack confidence in state projects. 87% complain that doing business in Russia "is complicated" or even "very difficult," due to the high tax burden, unstable legislation, administrative barriers and bureaucracy, as well as pressure from the state and supervisory bodies.

More than 60% say that the country has a very high rate of economic crime, and even more denounce the widespread corruption in all public and private spheres.

Under such conditions it is very difficult to reach and surpass the levels of the world economy as the president would like, with the servile applause of state officials. Only 7% of respondents believe that Russia will be able to compete on a global level.

About half believe that the Russian economy will continue to lag far behind the average global GDP, and a third hope that it can at least approach those levels.

The Ministry of Economic Development expects a minimum of 3% annual growth for 2022-2024, but none of the traders share its optimism. Such pessimism is shared by large international institutions, investment banks and Russian companies in the sector.

The International Monetary Fund admits a possible 2.9% for next year, falling to 2% in 2023, 1.8% in 2024, 1.7% in 2025 and 1.6% in 2026.

Another survey, conducted by the College of Business, proposes a rather complex picture. Respondents include six foreign investment banks, seven research centers, and some large Russian companies, along with two institutes of the Russian Academy of Sciences. Overall, they do not expect long-term annual growth beyond 2 percent, although they admit to 2.5 percent next year, aided by this year's low benchmarks.

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