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Strong 2023 doesn't show Russia on sustainable growth path yet, top official says



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Feb 27 (Reuters) -Russia's promising economic growth in 2023 does not mean it is sustainable, First Deputy Prime Minister Andrei Belousov said on Tuesday, pointing to various economic challenges including subdued productivity.

Russia's economy rebounded 3.6% last year from a slump in 2022, but the growth relied heavily on state-funded arms and ammunition production and masks problems that are hampering an improvement in Russians' living standards.

"(It) speaks to only one important thing, that we coped with the sanctions shock, we withstood the sanctions blow and overcame it," said Belousov at a business forum. "But this does not mean at all that we have entered a trajectory of sustainable economic growth."

President Vladimir Putin pledged in 2018 that Russia's GDP would consistently grow above the global average by 2024, but later pushed that target back to 2030. Now, with Putin seeking re-election in March, Belousov said that could be possible by 2027.

Without economic growth comparable to or exceeding global economic growth rates, Belousov said Russia would not be able to solve the major social problems it is facing.

"And now there are also defence tasks," he added.

Russia has been piling resources into the defence sector as it ploughs on with what it calls a "special military operation" in Ukraine.

"Whether we like it or not, the challenge of ensuring sustainable growth is imperative for the next six years of our lives. Unfortunately, it will not be possible to jump into this ... in one go or create it in a year," Belousov said.

Belousov identified labour shortages, decreasing hydrocarbon export growth, investment support, import substitution and productivity growth as key challenges for the economy that will ultimately dictate the population's living standards.

Russia's labour productivity index, one of Putin's key national development goals, fell 3.6% year-on-year in 2022, its steepest annual decline since the aftermath of the global financial crisis in 2009, according to data from statistics service Rosstat.

Labour productivity data for 2023 will not be published until late 2024, but the authorities' warnings about manpower shortages suggest there was no rebound in that figure last year.

"Whether we like it or not, real wages are tied to productivity growth."



Reporting by Darya Korsunskay
Writing by Alexander Marrow
Editing by Mark Potter

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