Experts say Russian economy undergoing “structural deterioration”

The Russian economy is undergoing a “simplification” process or even one of “structural degradation” read the Comments on State and Business bulletin compiled by experts at Moscow’s Higher School of Economics.

In the report, the content of which has been examined by newspaper RBK, it said that such a situation developed, because Russia’s commodity sector has reached historic heights, all the while maintaining a negative trend in non-oil sector.

"By the third quarter, the basic industries index rose by 0.4 percent … it is logical to [interpret this] as an indication that the negative trend is broken and there has finally been a transition to the phase of cyclical growth. However, as it turns out, almost all contributions have been provided by the raw materials sectors, the dynamics of which have almost nothing to do with the general state of the economy,” the report read.

In the coming quarters the contribution of commodity sectors in the economy “is likely to be negative,” the experts predicted.

Though the experts anticipate that the situation will normalize in 2017, they forecast a 0.9 percent drop in GDP in 2016.

According to the report, the third quarter of 2014 – that is before the onset of Russia’s economic crisis – showed growth in agriculture, mining, and cargo turnover. Since the start of the crisis, however, the commodity sector has grown by 4 percent, while the non-raw material has fallen by 9.3 percent.

Russia’s Ministry of Economic Development expects Russia's GDP to grow by 0.6 percent in 2017; in October, the International Monetary Fund announced a forecast of 1.1 percent.