Translated material
Possible options
The government insures itself against failure to fulfill its own plans
Yesterday the government received an updated forecast of socio-economic development for 2006 and the period until 2008. The work on this document is becoming more and more detailed. Since the beginning of the year, this is the third option proposed by the Ministry of Economic Development. But every time the government sends the document for revision due to insufficiently ambitious economic growth indicators. The previous version was wrapped on August 24. However, for more than three months, nothing fundamentally new has appeared in the forecast. Moreover, the GDP growth forecast for 2007-2008 turned out to be even lower than in previous versions of the document.To the two development options calculated based on the price of oil, a third, the most optimistic, has been added. According to the first scenario, the price of oil next year will be 34 dollars per barrel and 28 in the next two years. The rate of economic growth under such conditions is reduced to 4.7-4.8%.
According to the second option, “black gold” will cost $40 next year and $35-36 starting in 2007. At the same time, the government will increase investment spending while reducing the tax burden, carry out institutional reforms and adopt a strategy for the development of key sectors of the economy. All this will allow us to reach a GDP growth rate of 5.7% by 2008. In the previous version of the forecast, the influence of all these factors was assessed more positively. GDP growth, for example, by 2008 was supposed to be 6%.
The new, third option adds even higher oil prices to the above actions of the authorities - $45 per barrel in 2006 and $40 in the next two. However, additional petrodollars will not have a particular impact on the rate of economic growth. GDP growth under the third option will be 5.8% in 2006, 5.7% in 2007 and 5.9% in 2008.
The economic department explains the downward revision of the forecast by a lower forecast for oil and gas production, continued growth in imports and a slowdown in the growth rate of industrial production (mainly due to the metallurgical, coal and gas industries), which are not compensated by growth in the manufacturing industries.
The only forecast that was recalculated upward was GDP growth in 2005. True, the increase is purely symbolic. In the summer it was lowered from 6.5 to 5.9%, and has now been raised again - to 6%. Moreover, it is not the industry that should be thanked for this, but Russian citizens. As stated in the forecast, the revision was made possible due to increased household consumption. The inflation forecast for 2005 has been raised to 11--11.5%. “Despite the target parameters for the growth of tariffs of natural monopolies at the federal level, the level of tariffs for housing and communal services will increase by the end of the year by 33-34%, which is almost one and a half times higher than expectations at the beginning of the year,” this is how the Ministry of Economic Development and Trade explains the rise in prices.
In the future, however, inflation is still planned to be tamed. Next year, the price increase should be no more than 8.5%, with the exception of the third option, in which a range of 8-9% is possible, the Ministry of Economic Development believes. In 2007, the forecast inflation rate will be 6--7.5%, in 2008 - 4--5.5%.
The first option, however, was designed for unknown reasons. The forecast says the second and third scenarios are the most likely, while the first is “unlikely.” Moreover, the Ministry of Finance has already accepted the third option as a basis. The forecast for inflation next year has already been increased from 7-8.5% to 8-9%. However, this is explained not by the influence of high oil prices, but by additional budget expenses. However, the further forecast is not revised. “If monetary policy is reasonable, we will be able to reduce inflation to 4-5.5% in 2008, regardless of ultra-high oil prices,” a source in the Ministry of Finance told RIA Novosti.