Gaidar Forum, Moscow 15-17th January 2014
Last week I followed the dialogues emerging from Moscow’s annual economic forum. It congregates world renowned opinion leaders to discuss the Russian economy. This year’s theme was: “Russia and the World: Sustainable Development”.
It’s a shame, and perhaps a sign of the limited awareness of the Russian market, that not a single mainstream English-language publication reported on the Forum, ‘Russia’s Davos’. As such, I thought I would take it upon myself to briefly highlight, for an English-speaking audience, the most noteworthy topics discussed at this key event.
By and large – ironically – non-Russian participants were more optimistic about the Russian economy than the country’s officials. After another year of slowed world economic growth, Jeffrey Sachs of my alma mater, Columbia University, made a poignant comment: “There is no great crisis here. The unemployment rate, budget deficit and poverty rate [Russia] has, the US would happily trade for”.
That is not to say Russia can sit back and relax. In 2013 GDP in Russia was expected to rise by an average of 4%, but actual figures show just a 1.3% increase. This slow growth is coupled with warnings of higher inflation which currently stands at 6.5%. At the forum, a spokesman for the Russian Central Bank promised this year the Bank would address this so-called ‘stagflation’, which is a trend also hindering the markets of fellow BRICs, India and Brazil.
Above all, I think the Russians should pay heed to advice given by Augusto Lopez-Claros, Chief Economist and Director of Global Competitiveness at the World Bank. During his presentation Augusto criticised the heavy tax burden that currently hinders companies, especially SMEs. He explained that restricting smaller businesses will further slow growth, regional investment and competitiveness. I consider this a crucial step for a country in which one person in fifty deems it possible to set up a business. In comparison, elsewhere in Europe this figure is as high as one in four.
This week I look forward to reading the extensive coverage (in both English and Russian…) of analysis and forecasts from the World Economic Forum in Davos.