Will Russia’s Economy Grow? Will Living Standards Rise? Putin Outlines Priorities in His New Plan
How will Russia's economy grow in the next 10 years? Vladimir Putin has defined key milestones and priorities in his recent speech.
Yulia Makarova has noted basic economic indicators which the President spoke of.
- Yulia, hello. So, what will make the economy grow?
- Hello. There are several growth points, but higher living standards are regarded as of paramount importance.
10 years to increase GDP per capita by half. Vladimir Putin called this goal hard, but achievable. Russia must settle in the world's top-5 greatest economies and decrease the poverty rate in the country. The President has mentioned that the number of people living the poverty line has decreased in half as compared to the 2000s. However, it's still 20 million people. Putin reminded that starting from May 2018, minimum wage amount will be equal to the living wage. This will positively affect the incomes of 4 million people. The employment pattern itself needs improvement, as it's out of date right now.
Vladimir Putin: "We must resolve one of the key issues in the next 10 years. We must provide a stable, constant growth of our people's income. We must decrease the poverty rate at least by half in the next 6 years, basing on the principles of justness and targeting".
Cities will become the locomotives of economic growth. Russia's Spatial Development Program will be the driving force of Russia's development. To create modern living environment, to develop small businesses, so shape middle class nationwide are the goals that will receive a doubled budget in the 6 years ahead.
Vladimir Putin: "We need to create modern living environment. We need to makeover our cities and villages, preserving their identity and historic legacy. We already have successful experience in renewing urban environment. I suggest starting a Spatial Development Program in Russia, including the development of cities and other residential areas. We must at least double the expenditure for these goals in the next 6 years".
These growing cities must have more affordable housing. According to the President, 3 million families improved their living conditions in 2017. But, that's not enough. The goal is 5 million movings per year. It's time to decrease the rates.
Vladimir Putin: "In each particular case, loan costs and rates are individual. In general, we need to keep decreasing the average rate to 7-8%. We argued for a long time as to what number to announce in this address. But, we definitely must aim at 7%. In the next 6 years, mortgage must become affordable for the majority of Russian families, for the majority of working citizens, for young specialists".
Vladimir Putin has noted that we must switch from shared-equity construction to project financing to place the risks onto banks and developers instead of the population.
The President also touched upon the property tax. Let me remind you that in the next few years, it will be calculated using new methods. This has already led to a significant increase in payments. Vladimir Putin has ordered to refine the method within the next 6 months.
Anton Siluanov, Russia's Minister of Finance: "The President has ordered to prepare the changes in calculating cadastral values shortly. Also, when it comes to individual property tax, tax rates will be determined directly at the city level. Definitely, local governments, when determining the tax rates, must consider cadastral value, and of course can adjust the tax rate".
Now, back to Spatial Development. Putin has urged to build more roads, using life cycle contacts, infrastructure mortgage. The budget for these goals must be doubled in the next 6 years, allocating over 11 trillion rubles from all sources available. This will help transform Russia into a transit corridor, a logistic center for layovers and cargo storage. To this end, the throughout capacity of ports is to be increased the Arctic and the Northern Sea Route are to be further developed, with its throughput being increased tenfold, reaching 80 million tons.
Vladimir Putin: "The volume of transit containerization via our railroads must increase almost fourfold. This means our country will become one of the global leaders in containerization between Europe and Asia".
Among other sources of economic growth, Vladimir Putin has mentioned increasing workforce productivity by 5% annually as well as production investments and making industrial renewal by up to 25% of the GDP. Small and medium business must further develop so that medium-sized companies employ 25 million people by 2024. Also, non-resource exports are to be increased. According to the Head of the Ministry of Economic Development, the country has mechanisms for economy growth.
Maksim Oreshkin, Russia's Economic Development Minister: "Over the past 3 years, we've carried out structural macro economic reforms, creating conditions for sustainable long-term growth. This includes inflation targeting policy, switching to a floating exchange rate, budgetary rules, which were introduced last year, the procedure for government's currency purchases on the domestic foreign exchange market. All this facilitates and allows to predict the stable growth of economy".
To modernize the economy, infrastructure, and even state administration, the Presidents urged to apply new technologies. According to him, our delay in this matter may become the biggest obstacle to the effective growth.
Yulia Makarova has covered the main economic topics of the President's address.