The Russian Economy in 2019– 2020: From Stagnant Growth to a Revitalized Investment Cycle

Vasilieva N.I., Kashuro I.A., Musieva D.M.


The article analyzes the new strategic priorities of Russia’s economic development on the basis of the President’s Address to the Federal Assembly and the country’s budget for 2020–2022. The achievement of macroeconomic stability, low inflation, an impressive size of gold and foreign exchange reserves and low external debt will help reverse the negative demographic trend, restart the investment cycle in the economy and improve the standards of living for the majority of population. The paper identifies two groups of factors that led to the current situation in the economy. Firstly, it’s the external pressure resulting from a very high level of uncertainty. Secondly, the situation in the investment and business climate in the country continued to be complicated. Also, what’s worth mentioning are a tough fiscal policy and increasing tax pressure on businesses. Tax collection improved, but it was not accompanied by an increase in spending. In general, the situation in the Russian economy in 2019 remained stable, owing to a balanced macroeconomic policy. Inflation targeting kept prices and the exchange rate stable enough. Three problems, however, put Russia’s economic sustainability at risk: the predominance of fuel and energy exports; low level of investment in new projects compared to other countries; complication of political relations with the West, and some others. The main tasks of Russia’s economic development in the medium term are aimed at solving these problems, namely: achieving significant shifts in increasing labor productivity based on advanced technologies, growth of qualifications and new competencies; development of competitive sectors in manufacturing industries, in agriculture and services; increase in non-resource exports and revitalization of the investment cycle. In this context, investments of accumulated state reserves in major infrastructure projects and in Russian high-tech companies are indicated as instruments of economic stimulation. By way of conclusion, the authors emphasize that economic development cannot be ensured by state financial injections: it requires creation of an appropriate investment and legislative climate.


new strategic priorities; stagnant economic growth; budget system stability; new investment cycle; national projects; inflation targeting; financial stability; nonresource export.

DOI: 10.31249/rsm/2020.03.08

Download text