MOSCOW. Sept 4 (Interfax) - If Russia achieves the target indicator of 1.5-fold labor productivity growth by 2018, as set forth in a Russian presidential decree, macroeconomic imbalances could increase and the Russian economy could see heightened vulnerability to outside shocks, the Russian Economic Development Ministry believes.

The ministry has developed three primary scenarios in the context of its preparations for the 2013-2015 forecast.

"The chief variations of the forecast are based on relatively favorable assessments of external conditions: a resumption of 3.3%-4% in the global economy a year and a stabilization in the Urals crude price at $97-$104 per barrel," according to an updated socio-economic development forecast for 2013 and the planning period 2014-2015, which has been submitted to the government.

Scenario two, which is moderately optimistic and is the basis for the budget compilation for 2013-2015, reflects a relative increase in the competitiveness of the Russian economy, which is manifested in an enhanced import substitution trend. It also reflects an improved investment climate with a moderate rise in government spending on infrastructure development and accelerated growth in wages in the public sector in 2014-2015. Under this scenario, GDP growth is forecast at 3.7%-4.5% in 2013-2015.

Scenario one is conservative and assumes persistently low competitiveness with relation to imports, as well as restrained recovery in investment activity, with a reduction in real government spending on development. This scenario is based on the execution of a tight budgetary policy, connected with stagnation in government investment demand and lower growth rates in wages for public sector workers and servicemen. Annual economic growth rates in 2013-2015 are estimated at 2.7%-3.3% under this scenario - an average of 1.2 percentage points below the base scenario.

Scenario three, which envisages forced growth, is characterized by an intensification of all the current economic growth factors for reaching the target labor productivity growth parameter of 1.5-fold over 2011.

In one of his first decrees in his third term as Russian president in May, Vladimir Putin tasked the government with the following target indicators: 1.5-fold growth in labor productivity by 2018, an increase in investments to 25% of GDP by 2015, and a boost in investments to 27% of GDP by 2018.

"This assumes accelerated reforms for improving the business climate and an intense inflow of foreign capital, as well as an intensification in the use of national savings and growth in government spending aimed at developing infrastructure," according to the Economic Development Ministry's description of the forced growth scenario.

The forced growth scenario also envisages more favorable demographic trends. Average annual economic growth rates should rise to 6.1% in 2013-2018, with GDP growth reaching 7% in 2016-2018. "This scenario can be characterized by growing macroeconomic imbalances," the ministry warns. According to its calculations, the realization of this scenario could lead to an increase in debt in the private and state sector, and the current accounts balance could find itself in sustained negative values after 2015. "That will raise the vulnerability of the Russian economy in relation to external shocks," the Economic Development Ministry said.

Keywords: Russia, Economy, Business, Investment, Trade - Russian News - Russia - Johnson's Russia List

MOSCOW. Sept 4 (Interfax) - If Russia achieves the target indicator of 1.5-fold labor productivity growth by 2018, as set forth in a Russian presidential decree, macroeconomic imbalances could increase and the Russian economy could see heightened vulnerability to outside shocks, the Russian Economic Development Ministry believes.

The ministry has developed three primary scenarios in the context of its preparations for the 2013-2015 forecast.

"The chief variations of the forecast are based on relatively favorable assessments of external conditions: a resumption of 3.3%-4% in the global economy a year and a stabilization in the Urals crude price at $97-$104 per barrel," according to an updated socio-economic development forecast for 2013 and the planning period 2014-2015, which has been submitted to the government.

Scenario two, which is moderately optimistic and is the basis for the budget compilation for 2013-2015, reflects a relative increase in the competitiveness of the Russian economy, which is manifested in an enhanced import substitution trend. It also reflects an improved investment climate with a moderate rise in government spending on infrastructure development and accelerated growth in wages in the public sector in 2014-2015. Under this scenario, GDP growth is forecast at 3.7%-4.5% in 2013-2015.

Scenario one is conservative and assumes persistently low competitiveness with relation to imports, as well as restrained recovery in investment activity, with a reduction in real government spending on development. This scenario is based on the execution of a tight budgetary policy, connected with stagnation in government investment demand and lower growth rates in wages for public sector workers and servicemen. Annual economic growth rates in 2013-2015 are estimated at 2.7%-3.3% under this scenario - an average of 1.2 percentage points below the base scenario.

Scenario three, which envisages forced growth, is characterized by an intensification of all the current economic growth factors for reaching the target labor productivity growth parameter of 1.5-fold over 2011.

In one of his first decrees in his third term as Russian president in May, Vladimir Putin tasked the government with the following target indicators: 1.5-fold growth in labor productivity by 2018, an increase in investments to 25% of GDP by 2015, and a boost in investments to 27% of GDP by 2018.

"This assumes accelerated reforms for improving the business climate and an intense inflow of foreign capital, as well as an intensification in the use of national savings and growth in government spending aimed at developing infrastructure," according to the Economic Development Ministry's description of the forced growth scenario.

The forced growth scenario also envisages more favorable demographic trends. Average annual economic growth rates should rise to 6.1% in 2013-2018, with GDP growth reaching 7% in 2016-2018. "This scenario can be characterized by growing macroeconomic imbalances," the ministry warns. According to its calculations, the realization of this scenario could lead to an increase in debt in the private and state sector, and the current accounts balance could find itself in sustained negative values after 2015. "That will raise the vulnerability of the Russian economy in relation to external shocks," the Economic Development Ministry said.