MOSCOW (Reuters) – Russia on Thursday acknowledged for the first time that its economy would lag global growth in the next 20 years, setting the stage for an era of stagnation that could threaten President Vladimir Putin’s grip on power.
Economy Minister Alexei Ulyukayev forecast that Russia’s economy would grow by an annual average of 2.5 percent during that period – down from an earlier projection of 4 percent.
“The pace of Russia’s economic growth will fall behind the global average in the forecast period (until 2030),” Ulyukayev told journalists, presenting a revised long-term economic strategy.
The downward revision makes Russia a poor relation in the BRICS group of large emerging markets – also comprising Brazil, India, China and South Africa – which in recent years has closed the gap on the industrialised world.
Russia’s $2 trillion economy has slowed sharply since Putin returned to the Kremlin for a third presidential term last year, in stark contrast to his first two terms, when he set a goal of doubling the economy’s size in a decade.
The lack of reforms in an economy hamstrung by red tape, corruption and weak rule of law has led some economists to suggest that the government has no recipe to avert a slide into stagnation.
Prime Minister Dmitry Medvedev almost admitted as much in an interview with Reuters last week when he said “there is no magic formula to boost growth. In any case, if there is, we do not know what it is.”
The pessimistic outlook presented by Ulyukayev may increase pressure on Medvedev, who served a single term as president from 2008 until 2012, and whose political demise has been repeatedly predicted by analysts since he became premier in May 2012.
(Reporting by Lidia Kelly, Editing by Douglas Busvine and Timothy Heritage)