Page 31 - RusRPTJun24

2.12 Putin’s ‘May decree’ sets ambitious development targets
Vladimir Putin has followed each of his inaugurations as Russian president since 2012 by issuing a new “May decree.” And this week – which saw him embark on his fifth presidential term – was no exception. After the formal ceremony in the Kremlin on Tuesday, Putin signed a decree that sets out a series of targets for Russia’s development. They extend not just for the six years of his current term in office, but through 2036.
In official circles, these decrees enjoy a hallowed status very similar to the five-year plans that were promulgated with great fanfare by the Soviet authorities. When the Soviet Union collapsed in 1991, this practice was quietly forgotten.
Putin’s most recent “May decree” reflects a general move towards state capitalism, interventionist government and economic isolationism. One of the main measurable economic targets it sets is that Russia should break into the top four nations in terms of purchasing power parity (PPP). According to the World Bank, in 2022, Russia was in fifth place, just ahead of Germany. IMF calculations, however, put Russia in sixth. To get to fourth, Russia would need to overtake Japan within six years. This may be achievable given Japan's economic stagnation (in the last decade its economy grew by an average of just 0.8% each year). Russia’s current economic growth is driven by oil windfalls and high levels of state spending. It seems the Kremlin expects more of the same in the coming six years.
The decree also promised increased labor productivity, and a fall in structural unemployment. Apparently this will happen thanks to the development of innovative technology. However, this process will be hampered by Western sanctions. If it falls short, Russia will have to choose between low unemployment, and high productivity.
Another goal is to reduce the Gini coefficient – which measures income inequality – to 0.37 (a score of 0 is considered to mean a perfectly equal society). The Gini coefficient in Russia last year was 0.403 (up from a historic low of 0.395 in 2022). Inequality in Russia traditionally grows along with an expanding economy: the rich get richer faster than the poor see their incomes rise. But the nature of the current cycle of economic growth may mean a different outcome: spending on the war has caused lower income groups to gain wealth faster.
The decree also envisages the Russian stock market to grow to two-thirds of GDP (from its current level of one-third). That means average annual growth of 12%. This is achievable if the Central Bank is able to reduce interest rates, and avoid economic shocks. In 2023 the stock market grew 43% after à slump of 2022, but is still well below the pre-invasion level.
The decree is also designed to help achieve greater economic self-sufficiency. Imports are ordered to fall to 17% of GDP (they are currently worth 19% of
31 RUSSIA Country Report June 2024 www.intellinews.com