Rosstat: Russian economy adds only 1,3% in 2019

Last year’s GDP growth was the weakest since 2016

Rosstat: Russian economy adds only 1,3% in 2019
Photo: Marco Verch Professional Photographer and Speaker

Although the Russian economy saw a revival in the second half of 2019, it finished the year with a modest result. GDP growth amounted to only 1,3%, which was almost twice lower than in 2018. This year, analysts expect the economy to accelerate due to higher social spendings and national projects.

The pace of growth of the Russian economy fell by almost half in 2019, reports The Moscow Times citing economic data released by Russia’s Federal State Statistics Service (Rosstat) on Monday. According to the report, Russia’s GDP grew by 1,3% last year. By comparison, a year ago the indicator amounted to 2,5%. Growth in the natural resources industry was the biggest contributor to the total result, said Rosstat. Gas and gas condensate production expanded by more than 10% as well as the country’s finance and insurance sector.

Last year’s GDP growth was the lowest since Russia emerged from an economic crisis in 2016. However, the economy picked up in the second half of the year and managed to beat pessimistic forecasts from the World Bank and International Monetary Fund suggesting that growth wouldn’t climb above 1%. In November, the Russian Ministry of Economy’s former official Kirill Tremasov said that hitting the desired growth figure of 1,3% seemed “like a fantasy”, as the economy needed to grow by 1,9% in the final quarter of the year to meet the goal.

Gas and gas condensate production expanded by more than 10% in 2019. Photo: kremlin.ru

This year, economists expect Russia’s economy to accelerate. According to a poll of analysts conducted by Reuters, the consensus estimate of growth in 2020 is 1,8%. The increase is supposed to be fuelled by higher welfare payments for new mothers announced by President Vladimir Putin in January. A lot of hopes are also pinned on the revised budget that is currently being drawn up by the new Russian government. If the Kremlin decides to spend the $125-billion sovereign fund accumulated through oil profits in recent years, it will also contribute to faster economic growth.

President Putin has repeatedly stated that Russia should grow “faster than the global average” to ensure that its share of the global economy is not shrinking. However, the goal hasn’t been reached over the last seven years. The most optimistic forecasts for the Russian economy still expect GDP growth to stay below the expected 3% growth of the global economy. In 2020, the Ministry of Economy expects GDP to grow by 1,9%.

By Anna Litvina