HOME » Publications » Economic Review


Vol. 55, No. 2, pp. 123-134 (2004)

“Sustainability of Growth and Development of Financial System in Russia”
Evgeny Gavrilenkov (The Higher School of Economics, Moscow)

Economic growth in Russia in recent years took place on the back of the high oil price. Dependence of the Russian economy on the oil price is and will remain strong in the foreseeable future, although began slipping most recently. This dependence raises concerns over growth sustainability. Low monetization of the economy creates other sort of concerns related to sustainability of growth. Low monetization hampers economic diversification: credit is mostly short-term in the less monetized economy and the role of the banking sector in financing investments in productive capacities is low. Loan and deposit maturity, as well as the role of banks, will grow in line with growth in monetization. Monetization can not be raised artificially. It is associated with higher confidence, growing incomes and incentives to save money domestically.