National projects to add 0.1 pp to Russia’s GDP growth in 2020

TASS Russian News Agency | Dec 4, 2019 at 12:37 PM

MOSCOW, December 4. /TASS/. The contribution of national projects to the Russia's GDP dynamics will be about 0.1 percentage points in 2020, in 2021 - about 0.2-0.3 percentage points, the World Bank said in its Russia Economic Report released on Wednesday.

"In the first nine months of 2019, the general government fiscal surplus improved on the back of higher revenues. The setting up of the National Projects (which partly consist of investment expenditures) was slow in 2019, which negatively affected public investment. We expect the National Projects to contribute about 0.1 pp to GDP growth in 2020 and about 0.2 to 0.3 pp to GDP growth in 2021 as the negative impact from VAT increase somewhat diminishes and infrastructure component gets speed," the report said.

"Overall, the 13 National Projects involve 78 federal projects, for which the government has allocated 1.78 trillion RUB (approximately US$27.4 bln) for 2019. In October, spending on National Projects accelerated, and about 70 percent of the allocated federal budget spending was executed. The largest parts of the budget have been allocated to demography and infrastructure projects. Yet, the executed spending for four projects remains below 50 percent," the report said.

According to the World Bank, "Efforts to attract FDI and reduce barriers to external trade are important as well. Russia has undertaken important steps to improve its regulatory environment, advancing to the 28th position in the Doing Business Global rating. Yet several areas including Trading Across Borders, Protecting Minority Investors, and Resolving Insolvency continue to lag".

Meanwhile, the World Bank raised its forecast for the growth of the Russian economy in 2019 from 1% to 1.2%, in 2020 GDP growth will be 1.6%, and in 2021 - 1.8%. "After a weak performance in the first half of 2019, helped by monetary easing, faster public spending and some one-off effects, economic growth in Russia picked up in the third quarter at 1.7 percent, y/y. Consequently, our 2019 forecast has been revised upwards to 1.2 percent (from its previous reading of 1 percent). … Growth in Russia is expected to be 1.2 percent in 2019; 1.6 percent in 2020; and 1.8 percent in 2021," the report said.