Social sector

Investments and wages grow. Moscow economy's development in the coming years

Investments and wages grow. Moscow economy's development in the coming years
Photo: Press Service of Moscow Mayor and the Moscow Government. Denis Grishkin
Experts expect business growth and consumer demand expansion

The forecast of Moscow's social and economic development for 2020 and the prospected period of 2021 and 2022 has been approved at a meeting of the Moscow Government Presidium. Traditionally, the forecast is developed in two versions — the basic one, which is considered the principal forecast (made in line with the basic forecast for the Russian economy’s development), and the target one (optimistic).

The document gives the analysis of the basic factors of Moscow's development, and an assessment of the dynamics of the key performance indicators of economic and social development.

Sustainable economic growth

In 2019, Moscow's economy keeps developing steadily. Experts expect the gross regional product to grow by 2.4% this year.

Industrial production is expected to grow by about 7.1% from 2018, with investment in fixed assets increased to 20% to make up about RUB 2.8 trillion.

Average wages in Moscow are to grow by 9% in nominal and by 4.2% in real terms. Unemployment will remain low, with consumer prices expected to rise by 3.8%.

The most important business growth indicator is the growing number of individual entrepreneurs. For eight months of 2019, their number has increased by 8.2% from the end of 2018 to reach 346,200.

Another significant indicator of economic activity ― energy consumption ― also speaks for improvement in the business environment. In the first seven months of 2019, energy consumption in the commercial sector has increased by 0.6%.

Moscow's development is facilitated by systemic steps of the Moscow Government's economic policy.  Among them are:

— dynamic investment policy aimed at improving the business climate and attracting investment in the real economy sector;

— sustainable fiscal policy: raise competitiveness and improve transparency of city orders, budgetary investments in infrastructure development (first of all social and transport ones);

— incentive tax policy;

— balanced tariff policy to curb tariff growth and limit cross-subsidies.

Dynamics of indicators

In 2020-2022, basic socio-economic performance figures of Moscow's development are expected to further improve. Positive dynamics of the real sector's development, investment activity and expansion of consumer demand against the background of real wage growth and maintaining a high social standard will contribute to the growth of Moscow's economy.

According to the forecast, the gross regional product in 2020-2022 is to grow 2.3–3.4% per year, with real wages growing 2.9–3.2% per year.

The Targeted Investment Program will remain the key investment driver, with more than RUB 2 trillion to be allocated for three years. About two-thirds of this amount is expected to be spent on Moscow's transport system development.

As a result, investment growth is expected to be 5.5–6.8% per year, industrial production is projected at the level of 3.4 to 4%. In addition, retail trade and the share of paid services will grow by 2.5—3% annually.

Inflation is expected to be at 3.7% per year, while unemployment will remain minimal.