MOSCOW, February 20 (RIA Novosti) – Inflation in Russia is unlikely to stay within the targeted range of 4-5 percent by the end of 2014, IMF chief for Russia Odd Per Brekk said on Wednesday.
The Bank of Russia has set the inflation target at 4-5 percent for 2014 and 5-6 percent in 2013. The IMF expects inflation in Russia to stay at 6 percent both in 2013 and 2014, if the Central Bank’s policy is unchanged, Brekk said.
If the Central Bank of Russia wants inflation to stay within the targeted range next year, it should tighten its monetary policy, Brekk said.
Continuing uncertainty over global economic development means that prospects for the Russian economy also look uncertain, he said.
An IMF study shows that the Russian growth model, which ensured the country’s GDP growth by 5-5.5 percent a year before the global financial and economic crisis, has used up its potential, Brekk said.
In previous years, increased utilization of available production capacity and some growth in efficiency, rather than investment in new production capacity, were the main growth drivers. Besides, this growth was supported by high world oil prices, he said.
Considering these factors, Russia is confronted with the problem of a shortage of production capacity, he said.
In the medium term, the Russian economy can grow at a rate of over 6 percent a year, if Russia boosts investment in production but everything will depend on which economic policy the Russian government will pursue, he said.
Brekk's comments come just days after Prime Minister Dmitry Medvedev unveiled three future growth scenarios drawn up by the Economics Ministry, the most optimistic of which expects economic growth to reach 5.4 percent, but is reliant on diversification away from raw materials production.
The IMF has left its forecast on Russia's GDP growth in 2013 unchanged at 3.75 percent.
