Russia's GDP will equal Germany's - expert
2011-12-02 09:13:23
Russia has every chance of becoming Europe’s largest economy and entering the EU. This opinion is expressed in a book by competent economist Jim O’Neill, the author of the BRIC countries conception and the chairman of the board of directors of Goldman Sachs Asset Management. In his opinion, Russia should avoid economic crises, solve its demographic problems and support the GDP growth.
BRIC is the abbreviation for four most dynamically developing countries – Brazil, Russia, India and China. This name is 10 years old. After South Africa joined the organization, BRIC became BRICS. To mark the anniversary, Jim O’Neill decided to analyze the past decade and give a forecast for the future. Russia’s future is very optimistic, the expert believes. If Russia maintains the stable growth of the GDP at the current level of 4%, by 2017 the Russian GDP will be higher than that of Italy and in 18 more years Russia will outstrip France, the UK and even Germany which is the stronghold of all European economy.
Chief economist of the Deutsche Bank in Russia Yaroslav Lisovolik is more conservative in his assessment but he also admits that Russia has a colossal growth potential:
“Russia indeed looks stronger than the EU at present. Many of the EU problems have a long-term nature and it is obvious that with time the EU will face a restricted growth rate. At the same time, Russia has a sufficient potential for the diversification of trade and investment flows to Asia and its fast-growing economic markets. This should enable Russia to show high rates of economic growth in the next decade. In my opinion, Russia is in a position to reach Europe’s GDP level fast now, both in absolute GDP figures and per capita GDP."
However, Jim O’Neill gives several serious preconditions for his forecast to come true. One is overcoming the current demographic crisis, otherwise there will be no one to boost the economy. Second, experts interviewed by The Voice of Russia say that it is essential to work on the improvement of the investment climate. This means carrying out administrative, court and political reforms and the eradication of corruption. The head of the investment company Arbat Capital Management Alexey Golubovich comments:
“Most economists say that Russia is a potentially growing economy due to its vast internal consumption and great natural resources. At the same time, its economy is one-sided, as we only export raw materials. Time is ripe for economic reforms.”
Solving the problems emphasized by Jim O’Neill and other experts is already on the list of priorities compiled by the current Russian authorities. Moscow has repeatedly said that it plans to continue building reserves against future crises and will reduce dependence on the export of raw materials by developing new economic areas. The Skolkovo innovations centre near Moscow will come in handy here, especially because Jim O’Neill considers the high level of education in Russia one of the country’s competitive advantages.
The geopolitical results of Russia’s economic growth are even more exciting. Jim O’Neill believes that Russia will be able to join the EU in two decades. It is worth remembering that Russia’s authorities have repeatedly stressed the possibility of and even the vital need for creating a common economic space from the Atlantic Ocean to the Pacific.