Highway bridge construction between Moscow and St. Petersburg, Russia: investment in road networks is one way to increase productivity (photo: Peter Kovalev/TASS via Getty Images)
July 10, 2017
With Russia exiting a two-year long recession after a recent crisis, the time has come to implement necessary reforms to increase productivity—the foundation of sustainable growth and higher living standards—and foster new sources of growth, the IMF says in its latest economic report.
The need for a new growth model was already apparent before the recession. In the past, high commodity prices favored an economy dominated by oil, gas, and mining. Indeed, the high rate of return on commodities discouraged the development of alternative and more sophisticated products. In addition, structural constraints have discouraged private investment and the development of the non energy sector, resulting in a slowdown in catching up with income levels in advanced economies.
Russia should tackle structural shortcomings in its economic structure, which have remained largely unchanged from before the crisis. The IMF report also offers some suggestions to take advantage of the emerging opportunities from a more competitive exchange rate.
