May 17, 2003
Leading Russian Economist Casts Doubt on President Putin's Predictions for Economic Growth
MOSCOW, May 17. 'The possibility of GDP doubling by 2013 is extremely doubtful,' said Yevgeny Yasin, the research director of the Higher School of Economics, yesterday on Echo of Moscow radio. Yasin was commenting on President Vladimir Putin's annual speech to parliament. 'If we begin to grow at 8% a year from tomorrow, then it is achievable,' believes Yasin, 'but as we currently only have growth of 4.3%, I don't see how we are going to get to 8% in the near future. I have serious doubts about this.'
Yasin believes that the Economic Development Ministry's forecast is 'very optimistic.' 'It relies very heavily on tax reductions, but I don't really see how these reductions are going to happen,' he said. 'Also, the effect of tax reductions is not that straightforward.'
However, Yasin agreed with Putin that it is essential to increase competitiveness, although he stressed that 'this would reduce the speed of growth.' 'We can have either reforms or faster growth,' the economist said.
According to Yasin, research carried out by the Higher School of Economics shows that 'the economy has no incentive to increase productivity, due to low wages, nor to reduce energy consumption, due to low prices for gas and electricity, nor to invest in higher competitiveness.' 'I want to know how we are going to achieve high rates of growth without carrying out structural reforms, or how we are going to carry out these reforms at the same time as maintaining high growth rates. On the back of existing reforms we could grow at 6% a year, but only from 2007-2008. In this case GDP growth would be about 60%, not 100%, and only from 2007,' said Yasin.