The economic growth rates projected by the government for 2024 are not enough to reduce poverty and improve the quality of life of the population to target levels. These are the conclusions drawn by experts from the Department of Finance and Prices of the PRUE. Plekhanov 2022–2024 Preparing an Opinion on the Main Directions for Budget, Tax and Customs Tariff Policy for 2022-2024. Ministry of Finance (Vedomostik has a university report). The document was prepared for the State Duma on the eve of consideration of the draft budget. To ensure a steady growth in real income for Russians at 2-2.5% per year, the economy needs to grow at a rate of at least 4-5%, according to economists. The real income of the population in 2021 is the same as 10 years ago – in 2011, it was calculated by experts from the PRUE. Despite the fact that the average annual GDP growth has been around 2% over the years, the real income indicator has actually stopped. To take advantage of these, it is necessary to accelerate the economy by 1.5-2 times, says PRUE.
“The reasons for the negative dynamics of real incomes are related to the lack of a stable growth rate of the Russian economy (more than 5% per year), which was observed between 2000 and 2009, as well as the implementation of a tight budget policy after the global financial crisis of 2008-2009.” The Ministry of the Economy estimates that the real disposable income of the population in 2021-2022 will be at 3 and 2.4%, respectively, with a continuous increase of 2.5% over the period 2023-2024.
To improve the income situation, in the PRUE. Plekhanov was proposed to provide additional assistance to the population as a result of the pandemic: “Given that the coronavirus pandemic continues to be in a state of disrepair, the federal budget should provide subsidies if it implements restrictive measures to continue to pay incentives to the population and service companies.” According to them, the financial situation of the Russian population and business against the crisis of the practice of 2020-2021. Although the scale of similar measures in developed countries is smaller, it has had an effective impact on the recovery of consumer demand and, consequently, on the rate of economic growth in 2021.
Despite the measures required to actively combat poverty and encourage investment, the design of the federal budget for 2022-2024. it shows a return on moderate fiscal consolidation, experts say. “The passive policy of fiscal consolidation established in the previous pandemic has been completely exhausted,” said PRUE economists. Plekhanov. Under modern conditions, it is necessary to readjust budgetary priorities in the direction of long-term financial support for areas of progress.
In Russia, the range of state aid measures is constantly expanding, including various social benefits for families, a representative of the Ministry of Labor and Social Protection told Vedomosti. In addition, in accordance with the President’s instructions, additional measures will be proposed in the near future to assist the public. “At the same time, the fight against poverty is not limited to providing social assistance measures. One of the key areas for poverty alleviation is to realize the employment potential of the people, “the source said. 2.2 compared to last year).
Threats to income growth
According to Rosstat, in the first half of 2021, real income grew by 1.7% year-on-year. “No improvement in the indicator is expected in the second half of the year, given the growth of the base and the acceleration of inflation since 2016,” said Daniil Nametkin, head of the Center for Investment Analysis and Macroeconomics. Research by the Central Social Service. From his point of view, at the moment there are really big risks to achieving national goals related to improving the well-being of citizens. In addition to the insufficient rate of projected economic growth, which is still to be assured, he said the state of inflation is a serious threat.
The pace of inflation continues, albeit with a steady tightening of monetary policy, which has a cooling effect on the already “non-explosive” economic recovery, Nametkin added. In the income structure of the population, a significant share is taken by the social payments and salaries of state employees, the dynamics of which, at best, do not exceed much inflation, the expert continued. At the same time, mandatory payments are likely to grow at a faster rate. For example, in terms of interest rates on loans, payments will rise sharply given the record growth rate of mortgages and consumer loans, Nametkin summed up. GDP growth does not always reflect the income status of the population, says Georgy Ostapkovich, director of the Center for Market Research at the Higher School of Economics. Of course, according to economic theory, one of the main factors in the growth of household income is GDP growth: “If the economy grows, then production and profits grow, and then entrepreneurs are motivated to hire more people and pay more. salaries. It also increases the tax base and, therefore, the budget expenditure for social assistance, which also increases the income of the citizens.
It is possible to increase GDP by 5%, but with zero growth in household income, which means that there is a large share of non-productive expenditure in GDP. Moreover, capital outflows are important, that is, if money leaves the country, it eats away at that growth and “is of no use to the people.”
In addition, the PRUE accused the government of artificially sustaining the economy. According to the Ministry of Finance, the size of the National Welfare Fund (NWF) will increase by 9.4 trillion rubles in three years. Up to 23.3 trillion. The NWF’s growth coincides with an increase in the state’s domestic debt, experts say. On the one hand, the NWF renewal cuts the economy off some oil and gas revenues. On the other hand, the increase in national debt, which does not make much economic sense at this stage, affects the flow of capital from the private sector to the state. This design has a negative impact on the prospects of increasing GDP growth rates.
In fact, increasing the reserves in this situation is a questionable policy, but there is logic in the actions of the Ministry of Finance, says Alexander Shirov, director of the Institute of Economic Forecasting at the Russian Academy of Sciences. The government wants to accumulate additional lines of defense so that it can maneuver with budget spending in a crisis situation.
The Ministry of Finance did not respond to requests from Vedomost.