In the second session of the Fund Strategy Investment Summit, being held now in St Petersburg, I was expecting the speaking Russian economists to give a frankly glowing report on the state of the Russian economy.
Sitting in front of them were several fund managers and delegates from a variety of wealth management groups, a perfect captive audience. As a result what followed was somewhat of a surprise. The pictures painted by Sergey Aleksashenko and Olga Trofimenko were a tad bleak. Honest, but bleak.
Aleksashenko, a director of macroeconomic research at the Higher School of Economics in Russia and former deputy minister of finance of the Russian Federation, warned of an upcoming period of stagnation. (article continues below)
Meanwhile Trofimenko, an associate professor of the St Petersburg University, told a tale of a Russian economy going through a massive transition and the several problems it has to tackle to achieve economic development. For example she said that birth rates are falling in Russia which goes to show how uncertain people are over their future. She was also critical of a “dangerous lack of commonly accepted clear strategy” as power is transferred from Putin to Medvedev.
Trofimenko was also critical of the government’s insufficient labour incentives which she says is resulting in the country’s smartest people emigrating. This, she said, is a disaster for the economy.