Risk of not implementing new development model the main risk for Russia – Ulyukayev

File Photo of Cash, Coins, Line Graph

(Interfax – SOCHI, September 27, 2013) Russian Economic Development Minister Alexei Ulyukayev said the main risk for the Russian economy was the risk of not implementing a new economic development model.

There are external and internal risks that can affect the rate of economic growth, he said.

“But I think the major risk us the risk that we will nit implement that new economic development model that I discussed with the prime minister today and which ought to replace the previous model and which was successful in achieving recovery growth after the 1998 and 2008 crises, but which is spluttering now because it is based on constant growth in demand,” he said.

External risks include “the risk that European countries will not emerge from recession, that the situation with Asian countries will worsen, signifying a risk of decline in the export markets and limiting external demand with all its consequences for the budget and economic growth.”We’re testing that because we have additional budget scenarios that take this situation into consideration,” Ulyukayev said, calming those present.

He also his ministry’s expectation that it as possible to exit the current difficult situation and transition to “maybe not a very high bit stable growth rates from 3% in 2014 to 3.3% in 2016 are tied in mainly with domestic demand.”

“Domestic demand means expenditure, investment, household spending. We see a possible contraction in consumer crediting in future periods, and this is a risk for retail trade. There’s a possible risk for the volume of lending to business, and there’s the risk attached to the implementation of investment programs by natural monopolies,” he said. “We’re working on this, we think these risks exist, but that they are fairly moderate, and both the forecast and the government’s plan of action take this into consideration,” he said.

“Everything else is mainly tied in with costs,” Ulyukayev said. “We need to make the transition from an economy based on growth in demand to an economy of supply,” he said.

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