Early this month, the Russian government released its latest macroeconomic forecast. It could not have been an easy decision: Whereas President Vladimir Putin and his government campaigned in 2012 on a promise that the economy would grow at 5-6 percent per year during his six-year term, the growth rate is now expected to average just 2.8 percent from 2013 to 2020.
Minister of Economic Development Alexei Ulyukaev explicitly acknowledged that achieving the targets set by Putin "will take longer." In some cases, that means much longer. For example, in May 2012, Putin promised to increase Russia's labor productivity by 50 percent by 2018; the current forecast does not envision this outcome even by 2025.
For independent observers, the ministry's grim forecast comes as no surprise. Judging by low stock prices and high capital outflows, investors were already betting against high growth rates. Now Putin and Prime Minister Dmitry Medvedev are pessimistic as well. Medvedev, who had been publicly forecasting 5 percent annual growth as recently as January, told foreign investors in October that this year's growth rate would not exceed 2 percent.