Future Depends on Next Five Years' Reforms - Medvedev

Medvedev made his comments while unveiling a long-term budget strategy prepared by the Economics Ministry, based on three possible development scenarios from now to 2030, all of them noticeably more optimistic than three such scenarios presented earlier this year by economists at the Davos World Economic Forum.

"Exactly which scenario will materialize will depend on what we manage to achieve over the next five years, because we are now laying the basis for long-term development,” Medvedev said.

The Davos organizers warned, in a report prepared for the forum, that the Russian economy remains strongly vulnerable to world energy price fluctuations and was marred by poor state governance and a lack of structural reforms. The report was based on a poll of over 350 Russian and foreign economists and decision-makers.

"These [Davos] scenarios are quite pessimistic and follow from the assumption that we simply go with the flow, that we do nothing, or that some dramatic changes occur in energy and raw materials markets, or some other very serious and unpleasant things happen,” Medvedev said.

The Economics Ministry has proposed "conservative," "baseline innovation" and "desirable accelerated development" scenarios, which differ considerably from the pessimistic expert prognoses at Davos, Medvedev said.

In contrast to those pessimistic forecasts, Russia’s "baseline innovation" and "accelerated development" scenarios assume the success of measures to change the structure of the Russian economy and reduce dependence on raw material exports.

The "baseline innovation" scenario is based on creation of a modern transport infrastructure and a competitive hi-tech sector along with modernization of the raw materials sector. Even that scenario, however, envisages economic growth will slow from 4 percent in 2015 to 3.8 percent by 2026-2030, with investment growth falling from 7.3 percent to 4.8 percent by 2025-2030.

The Medvedev government is pinning its hopes on the Economics Ministry's "desirable accelerated development" scenario to fulfil Russian President Vladimir Putin’s electoral pledge to create and modernize 25 million hi-tech work places by 2020. The government expects it will boost economic growth to 5.4 percent, raise investment to 25 percent of GDP by 2015 and 27 percent by 2018, and increase the share of hi-tech output in GDP.