The agenda focused on the scenarios for the functioning of the economy, the key parameters of the socioeconomic development forecast and the projected changes in prices (tariffs) for goods and services of business entities in the infrastructure sector for 2025–2027.
Mikhail Mishustin’s opening remarks
Report by Minister of Economic Development Maxim Reshetnikov on the scenarios for the functioning of the economy, the key parameters of the socioeconomic development forecast and the projected changes in prices (tariffs) for goods and services of business entities in the infrastructure sector for 2025–2027
Government meeting
Government meeting
Government meeting
Minister of Economic Development Maxim Reshetnikov
Government meeting
Excerpts from the transcript:
Mikhail Mishustin: Good afternoon, colleagues.
In his Address to the Federal Assembly, the President presented a wide range of initiatives to support large families.
In line with his instructions, the Government has proposed a number of amendments to the current legislation. Now families with three or more children can receive 450,000 roubles to pay off their mortgage.
Last year, about 190,000 such payments were made.
We are now extending this measure for another seven years, allowing parents whose third child and subsequent children are born before 31 December 2030 to take advantage of government assistance in purchasing housing.
In total, more than 600 billion roubles will be required additionally for these purposes, including about 50 billion roubles this year.
The next item on our agenda is providing support to the Belgorod Region.
We thoroughly discussed this matter during the Government’s report to the State Duma. At the President’s instructions, a law has been drafted to extend the free economic zone regime to include the town of Shebekino. An additional 2 billion roubles will be allocated to support this region. Priority will be given to people who have lost their homes, employees of small and medium-sized enterprises, and sole entrepreneurs. Industrial enterprises will also receive funding for reconstruction, modernisation, expansion of production capacity, acquisition of new equipment, and most importantly, preserving employment opportunities.
In total, over 6 billion roubles will be allocated to the region for these purposes this year. Colleagues, I urge the departments responsible for fund allocation to ensure swift and efficient disbursement of these resources to both individuals and businesses.
Let us move on to another issue.
The next budget cycle is beginning. Today, we will discuss the scenarios for the operation of the Russian economy, along with the key indicators of the socio-economic development forecast for 2025, as well as the planning period spanning 2026 and 2027.
Over the next three years, we are tasked with addressing several systemic issues, particularly those highlighted by the President in his Address. It is imperative to initiate new national projects and uphold the nation’s steadfast advancement toward achieving its national goals.
Despite mounting pressure, the Russian economy has been resilient in adjusting to external challenges, aligning itself with national objectives, and boosting domestic production.
As a reminder, in February, GDP growth surged to 7.7 percent. Both the mining and processing sectors experienced expansion, while consumer activity showed signs of strengthening. Detailed discussions on various processes, including the development of a supply-side economy, were conducted during recent strategic sessions held at the Coordination Centre.
This overall trend has a positive impact on the federal budget indicators. By the end of the first quarter, revenues increased by over 50 percent compared to the corresponding period last year, creating additional opportunities for the realisation of projects that are important for the state.
The preliminary version of the forecast anticipates GDP growth of approximately 2.3–2.4 percent per annum over the next three years, driven by a rise in domestic demand.
Minister of Economic Development Maxim Reshetnikov will provide further insights into the scenario conditions and key parameters of the forecast.
Please, Mr Reshetnikov, the floor is yours.
Minister of Economic Development Maxim Reshetnikov
Maxim Reshetnikov: Mr Mishustin, colleagues,
As you have noted, we formulated the scenario’s conditions and the main parameters of the forecast for the next three years during the first stage of the budget cycle. I would like to remind you that the economy grew by 3.6 percent throughout 2023. We posted subsequent growth in early 2024. Moreover, the February statistics, mentioned by you, show that this growth is accelerating.
Key sectors, including the processing industry, the construction sector, trade, the public catering sector, transportation and tourism, are developing rapidly. Given current trends, we are expecting the GDP to grow by 2.8 percent in 2024. Nominal GDP is estimated at over 191 trillion roubles or 11.5 trillion roubles more than we expected in September 2023.
The domestic consumer market and investment demand remain the main factor of economic growth. Investment volumes are to increase by 2.3 percent this year. We have not modified the September 2023 estimate, but the 2023 base proved more substantial. As of late 2023, investment soared by a record-breaking 9.8 percent.
High consumption will persist throughout 2024. We are expecting the real retail trade sector to grow by 7.7 percent, with commercial services increasing by 5.1 percent. Expanding domestic production facilitates higher consumption growth, in the first place.
Growth in incomes facilitates consumption. In 2024, real and nominal cash earnings will increase by 5.3 percent and 12.3 percent, respectively.
Wages are the main factor contributing to higher incomes, and we are expecting real wages to increase by 6.5 percent.
Unemployment will not exceed 3 percent.
We are expecting inflation to slow down to 5.1 percent by late 2024. We had a 7.4 percent inflation up till the end of 2023. In effect, inflation is subsiding.
The rouble’s average annual exchange rate is to total 94.7 roubles to the dollar. In 2025–2027, we are expecting 2.3–2.4 percent annual economic growth, and the nominal GDP is to exceed 237 trillion roubles by 2027.
Annual investments are to grow by an average of 3 percent, and consumption is to soar by 3.7 percent.
Real incomes of the population will grow by about 3 percent, on the average. The trade surplus will expand gradually, due to a more rapid export increment, with imports growing more slowly. The rouble will grow weaker in line with inflation differentials, and its real effective exchange rate will remain stable.
We expect inflation to reach 4 percent in line with inflation targeting by the Bank of Russia. Risks also remain. Externally, this is a slowdown of the world economy as a whole and the economies of Russia’s main trade partners, as well as the continued sanctions pressure. Internal risks are primarily related to the sufficiency of domestic supply in the context of a limited labour market. These risks are taken into account in the conservative scenario, which, in accordance with the established order, is also presented.
The suggested basic scenario is realistic. It takes into account all of the Government’s implemented and planned measures that the President instructed it to carry out. They include the development of the domestic industry and projects of technological sovereignty in machine tool industry, aircraft and ship-building, microelectronics, medical technology, energy, space and other industries; support for investment activities, including soft lending for priority projects and sectors; active involvement of development institutes; the development of the taxonomy of technological sovereignty projects; development of the Project Finance Factory; applying mechanisms of promotion and protection of capital investment, special investment contracts, private-public partnership, and concessions, to name a few; active regional policy, including the development of geostrategic territories; support for the regions of insufficient economic potential, and encouragement of investment activities via infrastructure menu mechanisms.
Also, the flexibility of the labour market is considered by active training and re-education of personnel by taking the envisaged measures – increased involvement of young people in the workforce; removal of excessive barriers in the labour market, and increase of labour productivity wherever it is insufficient; support for exports, primarily non-resource and non-energy exports; the development of the transport infrastructure in general, which will improve connectivity within the country, mobility of the population and logistics of foreign trade; support for small and medium-sized businesses and other measures related to the development of the supply-side economics, infrastructure development and improvement of the living standards.
Mr Mishustin, I would like to suggest approving the presented basic scenario and take it as the main one for drafting a forecast of economic development and federal budget projections for the mid-term perspective.
Mikhail Mishustin: Thank you, Mr Reshetnikov.
No doubt, the discussion of the scenario’s terms is an important stage of the budget process. Now, proceeding from the forecast and other no less important strategic planning documents, the Finance Ministry must draft the parameters of the budget for the next three years in cooperation with other departments. In the process, it should consider the required funding for national projects, state programmes and areas that the President set forth in his address. All social measures must be taken into account for the people to receive necessary support and for the economy and industry to continue developing.
