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2.2 ​ ​What does this all mean for the economy?
While Putin’s Federal Assembly address was rife with political intrigue, it also contained important implications for the Russian economy. ​In his state of the nation address, Putin focused heavily on economic growth. In particular, he reiterated the target set in May 2018 that Russia achieve GDP growth above the global average, currently 2.6%, by 2021. Russia’s 2019 GDP growth is expected to be 1.3%.
To this end, Putin announced a package of social spending, including aid for mothers and low-income families with children. According to the finance ministry, these social promises will cost 400-450 billion rubles in 2020. This is a substantial increase from the 100-billion-ruble package proposed during last year’s address. Alexei Kudrin has called Putin’s spending promises this year the largest in the history of his state of the nation addresses. According to the economy ministry, GDP growth should increase by 0.3 percentage points this year as a result of the stimulus.
In addition to new spending, Putin’s decision to replace Medvedev with Mishustin is rumored to be aimed at advancing the national projects. Andrei Belousov, the Kremlin aide famous for proposing a windfall tax on metallurgical and petrochemical companies, may also become a first deputy prime minister. This is a powerful position: in the government that resigned yesterday, finance minister Anton Siluanov was the only first deputy PM. Given that Belousov was one of the architects of Putin’s 2018 May decrees, his reported government appointment speaks to the Kremlin’s desire to see economic results.
One interpretation of these data points is that after several years of low growth and unpopular fiscal reforms, Putin now seeks to prioritize economic growth to boost popularity in the lead up to the political transition. Yet despite Mishustin’s reputation for efficiency, poor implementation of the national projects is due to deep structural inefficiencies in Russia's bureaucracy, which will be difficult for the new PM to change. It also seems likely that the government will underspend on the 400-billion-ruble social package promised yesterday. Indeed, Putin has promised new social programs before, then failed to fully deliver.
2.3 ​ ​Rosstat predicts a decline in Russia's population over the next 20 years
In its latest forecast, Rosstat presents three different scenarios for Russian population growth until 2036.​ In two, Russia's population is shrinking compared to today.
The projections are based on a population of slightly less than 147mn in early 2020. However, it includes some 2.7mn people illegally annexed by Russia to the Crimean peninsula and Sevastopol, Bank of Finland Institute for Economies in Transition (BOFIT) reports.
According to Rosstat's basic forecast, Russia's population will decline by 3% between 2020 and 2036, to 143mn. The fertility rate remains low, but in this scenario, Rosstat believes that immigration will remain high, with Russia receiving an average of 260,000 net migrants each year. This would be close to the average of the last ten years. Net immigration was about 125,000 in 2018 and 220,000 in January-October 2019. However, the number of people born in Russia would be about half amn less than the number of deaths for most of the forecast period.
9​ RUSSIA Country Report​ February 2020 ​ ​www.intellinews.com