Economy’s adjustment to structural changes opens doors to investment

As the Russian economy is completing its adjustment to structural changes, the prospects for growth in production, exports and fixed capital investment become evident, notes the next issue of the Talking Trends, the bulletin of the Bank of Russia’s Research and Forecasting Department (R&F Department).

Accelerating growth primarily demands high-quality investment which takes time to be raised. The authors emphasise that the Bank of Russia’s moderately tight monetary policy favours the recovery of fixed capital investment, rather than impedes it, by reducing uncertainty.

Early this year, the economy turned to a slow but sustainable growth. The estimates of Q1 fixed capital investment released in May exceeded expectations considerably. Despite the negative calendar effect, industrial production demonstrated growth in April, which has become more uniform across sectors. Consumer activity is also showing a considerable improvement.

Inflation closed in on target but may accelerate temporarily in the forthcoming months due to the cold weather this spring. Rebounding demand will be another source of inflationary pressure. This environment poses risks to inflation anchoring close to target in the medium term, the document notes.

The views and recommendations expressed in the Bulletin are solely those of the authors and do not necessarily reflect the official position of the Bank of Russia.