Potential Growth : Outlook and Options for the Russian Federation
This paper examines the past and future trajectory of the Russian Federation's potential growth: the speed at which an economy could grow if all resources were utilized efficiently. The findings show that it peaked before the 2008 global f...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2018
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/437251543855591590/Potential-Growth-Outlook-and-Options-for-the-Russian-Federation http://hdl.handle.net/10986/30985 |
| Summary: | This paper examines the past and future
trajectory of the Russian Federation's potential
growth: the speed at which an economy could grow if all
resources were utilized efficiently. The findings show that
it peaked before the 2008 global financial crisis and
continued to decline up to 2017. The estimated potential
growth rate was 3.8 percent in 2000-09 and 1.7 percent in
2010-17, a 2.1 percentage point decline. The most recent
deceleration was due to a slowdown of productivity growth
and a shrinking potential labor force, rather than a
shortfall in capital accumulation. For its future
trajectory, under the baseline scenario, Russia's
potential growth is expected to continue its gradual
downward trend, from 1.5 percent in 2017 to 1.3 percent in
2022. It is expected to recover gradually thereafter,
primarily driven by stabilization of the labor force. The
simulations of proposed reform measures currently being
considered by policy makers, including a combination of
pension reform, more migration, higher investment, and
gradual acceleration of total factor productivity growth,
can double Russia's potential growth rate to 3.0
percent by 2028. Under the assumptions discussed in the
paper, pension reform, increases in migration, investment,
and productivity contribute 0.4, 0.2, 0.6, and 0.3
percentage points, respectively, to the increase in
Russia's potential growth rate. Potential growth is
found to be most sensitive to changes in total factor
productivity growth, suggesting that reforms that increase
productivity may have the most impact on boosting
Russia's potential growth. |
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