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but the structure of GDP growth changed notably. In particular, for the first time in ten years, net exports negatively affected GDP growth, decreasing 11.1%.
Goods exports dropped by 5.7% after growing more than 25% annually in 2017-18. This decline was due in large part to the U.S.-China trade war, which caused metal exports to suffer, along with delays in the construction of Nord Stream 2.
Russia has tapped out the easy export growth it enjoyed following the devaluation of the ruble in 2014. To boost non-oil exports the government has to make that investment increase happen.
GDP growth in 2020 will be helped by the low base effect, renewed growth of real disposable incomes, and an increase in public sector investment. The goal, of course, is to exceed the global GDP growth rate by 2021, as Putin has instructed. According to the latest IMF estimate, global economic growth is expected to hit 2.9% in 2019, 3.3% in 2020, and 3.4% in 2021. This presents a tall task for Russia’s economic policymakers, although all these numbers will come down after the conronavirus impact is taken into account.
The big political events on the agenda is a referendum on the changes in the constitution that will happen in the spring and is expected to easily pass. The changes should help to revitalise the government’s work and re-engage the population to some extent in domestic politics.
The next Normandy Four meeting with Ukraine is slated for April, but increasingly looks like it will be delayed as both sides are already arguing about the reading of the terms in the Minsk II agreements. Still, the progress in the conflict between Ukraine and Russia since Ukrainian president Volodymyr Zelenskiy took over have been palpable and more progress is expected.
And the rest of this year will be taken up with remaking the government under the new PM to prepare the ground for the 2021 Duma elections.
5 RUSSIA Country Report March 2020 www.intellinews.com
