The Russians prepared for belt-tightening


Photo: Artem Zhitenev / RIA Novosti

The economic development Ministry has revised to the downside macroeconomic forecast for 2018 and 2019 because of the government’s plans to increase VAT to 20 per cent. The updated version is published on the Agency’s website.

So, GDP growth will slow by more than half and by the middle of next year could fall below 1 percent. As of may 2018, the growth rate exceeded 2 percent. In the end, in 2019, it will amount to 1.4 per cent, while the April forecast growth was estimated at 2.2 percent.

According to Ministry estimates, inflation this year will accelerate from 2.2 to 3.1 percent, and next reach 4.3 percent. Simultaneously will significantly slow down the growth of real wages and will amount to 0.8 percent. Today it is estimated at 6.3 percent.

“The impact of slowdown in wages and consumer spending will be partially offset by a decrease in the savings rate”, — said in a forecast.

About the coming increase in VAT from 18 to 20 percent, Prime Minister Dmitry Medvedev announced in mid-June. The state Duma adopted a bill in first reading on 4 July. According to Russian authorities, the rate increase will play into the hands of Russian exporters and motivates the business to actively deliver products abroad.

Video, photo All from Russia.


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