In a new report, the World Bank has said Russia must diversify its economy, improve its investment climate, and make major infrastructure investments if it hopes to be competitive in the global economy.
In a report presented on January 12 at the opening of the Gaidar Forum, an annual gathering of businesspeople and economists sponsored by the Gaidar Institute and the Russian Presidential Academy of National Economy and Public Administration, the World Bank warned that Russia's competitiveness is eroding.
The bank's analysts predict Russia’s economic growth as 1 to 2 percent per year over the next few years, below the projected global average of 2.7 percent.
Russia needs major investment in transport, energy, public-utility, and social infrastructure, the report says.
"The infrastructure investment needs are staggering. ... estimated to be about $1 trillion -- 75 percent of Russia’s 2015 GDP."
"The infrastructure investment needs are staggering," the report says. "Russia’s public expenditure on infrastructure amounted to less than 1 percent of GDP a year in 2012-14, while the investment needs are estimated to be about $1 trillion -- 75 percent of Russia’s 2015 GDP."
Addressing the Gaidar Forum in Moscow, Prime Minister Dmitry Medvedev said that global competition was increasing as the global economy becomes more integrated. He also criticized the "sharp politicization of international economic relations" and the "use-of-force approach [and] sanctions that always run counter to economic considerations."
The premier identified "increasing technological backwardness" as the most serious problem facing the Russian economy.
Also addressing the Gaidar Forum, Deputy Prime Minister Olga Golodets said that "more than 1.5 million Russians" are working abroad.
"Today in the world it is hard to find a university, a company, where Russians are not present," she said, describing this as a "dangerous tendency." She added that the government must address the problem by "training human resources to work in the Russian economy" through competitive wages and conditions.
Russia’s economy has been hit hard over the last two years by low global energy prices and sanctions imposed by many countries after Moscow’s 2014 annexation of Ukraine’s Crimean Peninsula.
On January 10, the Russian Finance Ministry reported that the government spent almost 1 trillion rubles ($16.8 billion) from the Reserve Fund in December to finance the budget deficit.
At the end of 2015, the remaining balance of the fund was about $15 billion. The rest of the fund will be used to cover part of the deficit in 2017, the ministry said.
With reporting by Interfax, TASS, Reuters, and RBC