"Recovery is gaining momentum": the World Bank has improved the forecast for the Russian economy in 2021

The World Bank has improved its forecast for Russia's economic growth for 2021.

According to the organization's report published on May 26, the country's GDP is expected to increase by 3.2%, not 2.9% as previously assumed.

According to analysts, in 2022 the economy will demonstrate similar growth rates, and in 2023 it may add 2.3%.

According to the bank's experts, "the recovery of the Russian economy is gaining momentum."

According to experts, accelerated GDP growth will be possible due to an increase in investments and volumes of domestic consumption, as well as relatively low interest rates.

A general improvement in the situation in the global economy, together with an increase in oil prices against the backdrop of a gradual decrease in the incidence of COVID-19, should also have a positive effect.

The organization recalled that in 2020, against the backdrop of the coronavirus pandemic and the global crisis, the decline in Russia's GDP was below expectations and amounted to only 3.0%.

At the same time, the global economy contracted by 3.8%, and the GDP of developed countries - by 5.4%.

This state of affairs was due to several factors, according to Apurva Sanghi, lead economist for Russia at the World Bank.

According to him, first of all, we are talking about the work carried out by the Russian government in recent years to ensure macroeconomic and fiscal stability.

“Other factors include improved banking regulation and supervision, the accumulation of capital and liquidity buffers, relatively soft restrictions on industry and construction, close ties with China, which has relatively high growth rates, a relatively small size of the services sector, and a large public sector that has provided protection from unemployment, ”added Sanghi.

In addition, in 2020, the economic downturn in Russia made it possible to contain measures of state support for the population and business in the form of concessional loans and direct payments.

This point of view, in an interview with RT, was expressed by Georgy Ostapkovich, director of the Center for Market Research at the Institute for Statistical Studies and Economics of Knowledge at the Higher School of Economics.

“Due to subsidies and benefits, the business was able to withstand and retain its maximum labor force.

If such support continues this year, albeit on a smaller scale, it will also help accelerate the economy, ”Ostapkovich stressed.

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Work moment

At the same time, as noted by the World Bank experts, against the background of a confident economic recovery, the Russian labor market has not yet returned to pre-crisis values.

According to Rosstat, as a result of the consequences of the pandemic from January to August 2020, the unemployment rate in Russia rose from 4.7% to 6.4% - the highest level in eight years.

In December, the value dropped to 5.9%, and in April 2021 it was 5.2%.

"The labor market, although it is gaining momentum, is still weak, and the demand for labor has not fully recovered ... The number of job advertisements posted by employers in employment centers still lags behind the pre-pandemic indicators," the organization stated ...

Meanwhile, by the end of 2021, the unemployment rate in Russia may fall below 5%.

Pavel Sigal, the first vice-president of the all-Russian public organization of small and medium-sized businesses "Support of Russia", shared such an assessment in an interview with RT.

“The increase in employment in the tourism sector, in the catering sector, as well as in the areas of services can seriously contribute to the decrease in unemployment.

In addition, we see an increase in demand for personnel in the delivery and online retail sectors, which will also be a positive factor for the labor market, ”added Sigal.

Fighting poverty

At the same time, the level of poverty in Russia has already dropped below pre-crisis levels, the World Bank experts note.

So, from January to September 2020, the indicator rose from 12.3% to 13.3%, but in December it dropped to 12.1%.

And in 2021, the value may reach 11.4%, the organization predicts.

Recall that within the framework of the program of national development goals by 2030, the poverty level in Russia should be halved compared to 2017 - to 6.6%.

According to the experts of the World Bank, it is possible to achieve this goal if more effective social security systems are created.

According to the organization, Russia annually spends more than 3% of GDP or $ 30 billion on social support programs. This level of spending, experts say, is more than three times higher than the total income shortfall of all poor families in the country.

“Russia has traditionally had a very impressive set of social security systems.

However, the country spends more on social security systems than other countries in the Europe and Central Asia region, where the figure is 2.2% of GDP.

The introduction of a state targeted program may become a key factor in cost-effective poverty reduction, ”the World Bank analysts say.

In particular, world creditors are proposing to introduce in Russia a minimum guaranteed income for citizens living below the poverty line.

According to experts, the cost of such a program will be about 0.33% of GDP.

“The introduction of a national minimum guaranteed income program will ensure the achievement of the poverty reduction goals and will be less costly.

Such a program presupposes the orientation of the use of its main forces and means to support those in need, in order to guarantee them a living wage, ”the organization stressed.

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Meanwhile, experts interviewed by RT assess the effect on Russians and the economy as a whole from the introduction of a minimum guaranteed income differently.

According to Pavel Sigal, in addition to reducing poverty, the initiative will stimulate consumer demand and further accelerate GDP growth.

In turn, according to Georgy Ostapkovich, it will be difficult to create a system for real targeted assistance to low-income citizens.

“Firstly, the accrual of payments to all in the amount of the minimum wage (12.8 thousand rubles) will not contribute to solving the problem of poverty.

Secondly, if you give money to the poor, then you will have to eliminate some of the subsidies and carry out a new monetization of benefits.

It is not a fact that the size of the payment will be able to cover these benefits, ”the specialist emphasized.

In his opinion, a reduction or zeroing of the personal income tax rate for the poor can become a more effective measure to combat poverty.

Such a measure will make it possible to qualitatively improve the standard of living of citizens living below the poverty line, the expert concluded.