Russia: fear of Investing

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The Russian economy is growing slower than expected. This has not only economic causes but also political and other. About the background of our correspondent Miodrag Soric.

The world Bank has lowered for the current year its growth forecast for Russia to 1.5 percent. A few months ago it expected 1.8 percent. “The Russian economy is growing only half as fast as the world economy,” complains Valery Viktorivitsch Mironov, Professor at the Higher school of Economics in Moscow, in an interview with Deutsche Welle.

The reasons are primarily political and psychological, he says. Although revenue fell due to the Oil-exporting in 2018, much higher than expected. However, the thus generated had been reinvested in more revenue to a small part only. Companies many to count, but also the state divisions for economically more difficult times, which is apparently in Russia.

The Kremlin promotes protectionism

It is still unclear whether the USA screw to tighten the sanctions further. The Kremlin promotes protectionist tendencies. The state rate is increasing year by year. The building of a strong middle class is not advancing. The Russians have due to the increase in VAT and the pension reform, less money in your pocket – and spend less.

No wonder that the world Bank remains also for the next years are pessimistic. 2020, and 2021 of Moscow’s growth will start the engine. The world Bank expects a growth of under two percent. The forecasts of the Kremlin are significantly more optimistic. President Putin announced for 2021, a three-percent growth. But the doubts remain.

Western investors more cautious

Also in the case of Western investors. German companies want to invest in 2019, about 626 million euros in the Russian economy – and thus significantly more than in the previous year. So anyway, a survey by the German chamber of Commerce under 168 German companies. But overall, the number of German companies in Russia. Nearly two out of three German companies believe that the Russian economy will stagnate in 2019. Optimistic and 41 percent are pessimistic and 23 percent of the respondents look to the future. Wolfgang Büchele, Chairman of the Eastern Committee of the Eastern Association of German economy (Oaoev), it brings in Berlin to the point: “investors need a long-term stable environment”. Exactly what is lacking in Russia.

But there are also signs of hope. The weak ruble makes exports, says Valerij Viktorivitsch Mironov. If the Kremlin succeeds in solving its political problems, would grow Russia’s economy is significantly stronger. However, the Misnk-process falters, negotiations with Japan on the future of the Kuril Islands is not in the length, an improvement in the relations with the United States, is in sight.

All the notes that Russia’s economy will continue to grow in the coming years, only slowly.