(MENAFN- AFP) Russia on Tuesday once again sharply lowered its growth forecast amid fresh indications that the resource-rich nation would remain one of the emerging world's worst performers for years to come.
Economy Minister Alexei Ulyukayev said factors ranging from disappointing investment levels to slowing consumer demand and industrial production meant Russia would achieve 1.4-percent growth this year instead of the 1.8 envisioned just weeks ago.
"On the whole, the stagnation continues," Russian news agencies quoted Ulyukayev as saying while on a visit to Bali.
The downgrade is the latest in a series following President Vladimir Putin's promise to achieve a 5.0-percent growth rate that would have marked Russia's emergence from the 2008-2009 global financial crisis.
Ulyukayev's ministry initially reduced Putin's forecast to 3.6 percent before cutting the figure again to 2.4 percent and warning of future downward revisions.
Russia enjoyed 7-percent annual growth during Putin's first two terms in the Kremlin between 2000 and 2008 thanks to booming prices on its energy exports.
But it only achieved 4.3-percent growth in 2011 and saw the rate slip to 3.4 percent last year due to an unhealthy investment climate -- replete with red tape and corruption -- that has seen investors park hundreds of billions of dollars abroad.
Moscow's Alfa Bank said a large part of the problem stemmed from chronic underinvestment that has seen the average age of capital stock stay steady at 15 years during Putin's time in power.
"Potential economic growth is limited by outdated capital stock," the bank said in a note to clients.
"Unsurprisingly, capacity utilisation has recently approached the pre-crisis high of 66 percent, confirming constraint of productive capacity."
Years of lagging growth
Ulyukayev cautioned that the economy was unlikely to pick up much steam in the immediate future despite government efforts to speed up investment in massive infrastructure projects such as repairs to Russia's vast road network.
Economists warn that current levels of state bureaucracy and corruption may reduce much of the impact of such work.
They also suggest the economy is already performing near full capacity and that monetary measures such as lower interest rates were only likely to feed inflation while doing little to spur growth.
Ulyukayev lowered the forecast for next year's expansion rate to 2.4 from 3.0 percent while also trimming in the 2015 figure to 2.8 from 3.1 percent.
"We lowered our GDP growth forecast partially because the investment rate for 2013 was lower than expected," said Ulyukayev.
The downward pressure on Russia's economy -- and its lag behind other emerging markets -- is underscored most graphically by fundamental problems in its vital industrial production sector.
The London-based Capital Economics consultancy predicted on Tuesday that industrial output growth among emerging markets in the third quarter should accelerate to 6.0 from 4.0 percent in annual terms.
But Ulyukayev said the rate in Russia should only go up 0.15 percent this year.
He also issued a spate of depressing forecasts for consumers that both threaten to wear on Putin's popularity and should be of particular government concern.
The economy chief said the ruble -- a currency with a long history of post-Soviet turbulence -- was likely to continue to weaken against the dollar in the short term while real wages would only inch up.
Ulyukayev said the rouble would slip to an average rate of 33.9 against the dollar next year and continue its decline through 2016.
The Russian currency traded on Tuesday at 33.25 against the greenback -- its lowest rate since the worst months of the economic crisis in 2009.
He also said real wages would grow 0.7 percent less next year than the government had hoped.
"Consumer demand will be lower in 2014 than we expected," said Ulyukayev.
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