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Working meeting with Minister of Economic Development Maxim Oreshkin

June 3, 2019, The Kremlin, Moscow

Vladimir Putin held a working meeting with Economic Development Minister Maxim Oreshkin to discuss the dynamics of macroeconomic indicators in Russia.

President of Russia Vladimir Putin: Mr Oreshkin, let us start with the macroeconomic indicators.

Economic Development Minister Maxim Oreshkin: If you look at the figures for 2018, they look generally good – we have a GDP growth of 2.3 percent.

Vladimir Putin: This is more than we expected or predicted.

Maxim Oreshkin: Yes, this is the highest growth rate since 2012, so we are gradually boosting it, doing slightly better than the forecasts, but still these figures are lower than the target ones. We have to get to a pace of more than three percent. There is one more positive result, the growth of investment at 4.3 percent in 2018. In two years, we have 9.1 percent, that is, a very solid growth rate, higher than the GDP growth rate. Therefore, the overall picture is not bad here.

We do not have very good statistics for the first quarter of 2019, but we expected this. However, certain decisions (such as the increase of VAT) are apparently better tolerated by the economy than many expected. Growth has slowed down in the first quarter. Inflation reached a maximum of 5.3 percent in March, but according to our estimates, this is the weakest figure this year. Inflation has passed its peak, and is now starting to slow down. By the end of the year, economic growth will also begin to accelerate.

The forecast for the year is 1.3 percent. But we can see that the figures can turn out better than we now expect, still, we are not revising the forecast yet. We will wait and see how the situation unfolds. Here the most important thing is to continue working – there are two main tracks in which we are currently working.

The first track is regional. This is very important, because the economy is spread out across the regions. Each one is unique, and we are working systematically with each. There was a State Council meeting in Crimea, which took place at the end of last year. There, 15 indicators were identified, describing the socio-economic situation, the situation in different areas. Now we are completing the work on the methodology for these indicators. The KPI will be set for each region, taking into account their starting conditions and the dynamics in each region.

Of course, it is important not only to set targets, but to help the regions achieve them as well. The State Council is conducting systemic work to this effect; Governor of Perm Territory Maxim Reshetnikov and I are leading the State Council working group. We are now detailing the current state of affairs on the labour and investment markets and identifying goals for 2024. We are looking at concrete steps that need to be taken in the region in order to achieve these benchmarks.

Vladimir Putin: In other words, you are actively working with the regions in this regard?

Maxim Oreshkin: Yes, we are. Here is another track that Mr Medvedev announced and issued corresponding instructions for. Ten regions with low economic indicators have been selected. A Government supervisor will be assigned for each such region. The first one has already been announced – the Republic of Tyva which I will be overseeing. We are now using this region to test all the spheres and investment projects that are being implemented there. We are looking at what needs to be done, and who needs help. We are going through all the 15 benchmarks to identify issues and to see how national projects reach each specific region. Based on this region, we will work out specific approaches, which we will then be replicated elsewhere.

Of course, the second track, investment, is also critical. As I mentioned earlier, we see a 4.3 percent growth here. In fact, growth varies across industries, and some are lagging behind. For example, negative investment dynamics were noted in the oil and gas industry over the past year even despite high profits, which have increased substantially. The transaction with OPEC has a certain deterring effect on corporate investment here, which limits the total volumes. But this, of course, has a negative effect on the overall figure.

There is housing construction, which is also showing negative results, because the industry is being restructured to fit the new regulations.

However, there are quite good numbers as well: more than 7 percent in the manufacturing industry and over 5 percent in agriculture. Clearly, the sectors that should show better dynamics are actually showing them. It is necessary, of course, to speed it up.

Anton Siluanov and I are now looking at barriers and regulations in each industry that need to be adjusted in order to improve the investment process, because we have accomplished quite a lot in the past 10 years in terms of overcoming system barriers. One of the indicators is that we have moved up to the 31st place in the Doing Business rankings. We are carefully looking at regulations in each specific industry, because the structure of taxes must be adjusted in certain industries and certain requirements must be changed as well. Of course, in each industry, we see that there are ways to speed up the investment process.

Vladimir Putin: Good. Thank you.


June 3, 2019, The Kremlin, Moscow