Russia: Putin likely to reveal more details about his economic plan - Rabobank

In his annual speech before the two chambers of the parliament President Putin is likely reveal more details about his economic plan that will be one of the main pillars of his presidency for next six years, according to analysts at Rabobank.

Key Quotes

“Given that for the first time in more than a decade a majority of Russians favour economic reforms over stability (young people are the strongest supporters of reforms), once re-elected later this month President Putin may focus on implementing structural measures that would improve living standards and would further reduce reliance on global demand for Russian oil and gas. The government reportedly intends to significantly increase spending on education, health and infrastructure by 1.5-2% of GDP, which would be in line with the economic programme for 2018-2024 prepared by former Finance Minister Kudrin for Putin. After the presidential election Putin may also reshuffle the government.”

“If pro-market friendly Kudrin holds a prominent role within the administration (there were speculations that he could even replace Prime Minister Medvedev), it would be an indication that President Putin fully endorses structural reforms. This in turn would improve demand for Russian assets amongst foreign investors already encouraged by S&P upgrading Russia’s sovereign rating to BB+ from BBB-. The incentive to make significant progress on economic reforms may, however, weaken if oil continues to hold well above the official government forecast.”