World Economy

Russia Needs to Invest Heavily in Infrastructure

Russia needs to invest in transport, energy, public utilities and social infrastructure.
Russia needs to invest in transport, energy, public utilities and social infrastructure.

Russia needs a large-scale increase of investments because of wear and tear of transport, energy, public utility and social infrastructure, the World Bank said in its research of the Russian economy.

“The infrastructure investment needs are staggering. Russia’s public expenditure on infrastructure amounted to less than 1.0% of GDP a year in 2012-14, while the investment needs are estimated to be about $1 trillion—75% of Russia’s 2015 GDP,” Tass quoted the World Bank report as saying.

“Depreciation of capital stock, particularly in transport, energy, public utilities, and social infrastructure, is the main driver of the need for major infrastructure investment,” the research says.

Russia’s transport network is vast yet unevenly distributed geographically and suffering from poor quality, the World Bank reports. “Traffic congestion on the core road network increases transportation costs and hinders urban growth by extending commuting time. The most affected regions are those that are not connected to the main railway and road transport systems or are far from the main trade and service centers in the western part of the country,” the bank said.

Moscow is among the world’s top three cities as regards the rates of infrastructure development, Mayor Sergei Sobyanin said on Friday in an interview with Rossiya One channel.

“As regards the rates of development of the infrastructures convenient for city dwellers, we’re definitely among the top three cities of the world,” he said.

In the past, the city kept developing while its transport infrastructure and social system had fallen far behind and that is why the authorities had to adopt outstripping rates of construction eventually in order to make the life of city residents comfortable.

“We could have done this more evenly over the past twenty or so years but we didn’t do it,” Sobyanin said. “So we had to make up for it within just the past five years and this will continue in the next three to four years”.

Meanwhile, Russia’s Economic Development Ministry considers the 4% inflation target for 2017 to be attainable. “I see no serious threats for our inflation target of 4%,” Russian Minister of Economic Development Maxim Oreshkin said.

“The Economic Development Ministry’s official outlook for this year is 0.6% (GDP) growth. We expect 2017 growth to be greater than forecasted. In the second half of 2017 growth may exceed 2%,” the minister said.


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